The employment problem of the LDCs arises from their age distribution, and especially the age distribution of their educated manpower. The supply of college graduates tends to increase faster than industry's demand for them. On one calculation for Indonesia, college graduates increase annually by 0.64 per thousand labour force in 1980, while demand goes up by 0.40 per thousand labour force. That means that 0.24 (per 1,OOO 1980 labour force) of college graduates will one year later have had to lake jobs that in 1980 were filled by senior high school graduates. This ‘pushdown’ effect applies at each level; 2.34 per thousand labour force who were junior high school graduates will have taken jobs that before were filled by elementary school graduates. The effect is rifling in any one year, but over 10 years he cumulative effect is great: for example, by 1990 virtually all those holding junior high school jobs (as classified in 1980) would have graduated from senior high school, on the model here used. If this is occurring, then market forces ought to reduce the wage premium for education. This is exactly what we find. Between 1976 and 1986, money wages for those with less than primary school graduation increased in the ratio 4.70, whole those with university graduation increased in the ratio 2.65.