Abstract: The question that whether the number of college graduates exceeds the capacities of the industrial structure is seriously impeding the governments' decision of human capital investment. Previous studies that explored the effect of upgrading of industrial structure on the employment of college graduates in static or single direction causation perspectives cannot provide effective policy supports. This paper, based upon the effects from the perspective of simultaneous interaction between them and the provincial panel data model and the index construction of weighting industrial labor productivity achieved the following findings.Firstly, the results show that upgrading of industrial structure has insignificant effects on the employment of college graduates in single direction causation perspectives. Secondly, upgrading of industrial structure, however,has significant positive effects on the employment of college graduates from their simultaneous interaction perspective. Thirdly, by the regional comparison, the upgrading of industrial structure of the developed regions have more effects on the employment of college graduates, which means advanced industrial structure has better capacities of absorbing graduates. In conclusion, it was because the employment of college graduates that promoted upgrading of industrial structure, and that in turn increased the demand of college graduates, which is called “skill acceleration” in China.In other words,the upgrading of industrial structure has long-term effects on the employment of college graduates. This study therefore will provide some useful theoretical and practical foundation for the government's policy-making in human capital investment.

Key words: upgrading of industrial structure, employment of college graduates, investment of human capital