The human capital hypothesis and the screening hypothesis were commonly used to explain the positive effect of education level on individual incomes in the field of education economics. Using graduates of the newly-upgraded universities of China as the sample, this paper tested the two contending hypothesis. The results were in favor of the human capital hypothesis, which indicated higher education was rather a production means than merely a signal of productivity for graduates of these universities.

Using graduates from the newly-upgraded colleges as a sample, we used the Wiles test on the Human Capital Hypothesis vs. the Screening Hypothesis of education economics. The results were in favor of the former, i.e., higher education was more likely a production means than just a signal in the job market. Thus the newly-upgraded colleges should adjust their curriculum and faculty structure to accommodate the skill demands in job markets.