author: “StudyHK Editorial” pubDatetime: “2026-02-15T16:06:10Z” modDatetime: “2026-02-15T16:06:10Z” tags: [“Return”] lang: “en” draft: false
1. Defining the Problem: A Typical Dilemma for Hong Kong Graduates
“Should I return home or stay in Hong Kong?” is a cross-period decision that approximately 20,000 non-local graduates from Hong Kong universities must answer each year. According to a document submitted by the Hong Kong Immigration Department (ImmD) to the Legislative Council, around 16,000 visas were approved under the Immigration Arrangements for Non-local Graduates (IANG) in 2023, a more than 50% increase from 10,275 in 2022. This figure does not include graduates who stay through other channels like the Top Talent Pass Scheme. During the same period, public data from China’s Ministry of Education indicated that over 580,000 overseas returnees sought employment in China in 2022, with fresh graduates from Hong Kong and abroad facing the phenomenon of a “diminishing returnee premium” in the competitive job markets of first-tier cities. The essence of this issue is not merely a choice of location, but a problem of optimizing human capital allocation under multi-period and multi-constraint conditions. Academia has a well-established framework—the decision tree model—which can be used to evaluate the expected net benefits of different decision paths under uncertainty. Based on this model, this article focuses on four quantifiable economic variables—starting salary, housing prices, children’s education costs, and after-tax disposable income—to conduct a dual-city comparison between Hong Kong and Shenzhen (a representative first-tier city in the Greater Bay Area). It also includes an analysis of several non-economic factors, providing a structured evaluation tool for graduates holding IANG status.
2. Basic Structure of the Decision Tree Model
A decision tree starts from a “root node” and splits layer by layer based on key variables. The first layer of this model is “starting salary and salary growth slope,” which directly determines the graduate’s initial cash inflow and future income expectations. If the starting salary gap between the two cities is sufficiently small (or negative), the decision will quickly tilt towards returning home. If the gap is significant, the model moves to the second layer: housing costs. Under the housing cost layer, “price-to-income ratio” and “rent-to-income ratio” are used as proxy variables to discount the time to first home purchase and monthly housing expenses. If Hong Kong’s housing cost advantage is not as expected, the decision moves to the third layer: the trade-off between the cost and quality of children’s education. If graduates have plans for children, education variables enter the utility function. The fourth layer is after-tax net disposable income, including the differences between the tax wedge, Mandatory Provident Fund (MPF) in Hong Kong, and the “Five Social Insurances and One Housing Fund” in Mainland China. Finally, the decision path is re-evaluated under the long-term regulatory dimension of “obtaining permanent resident status after seven years of stay in Hong Kong.”
3. First Layer: Comparison of Starting Salary and Salary Growth Slope
The University Grants Committee (UGC) salary survey for the 2022/23 academic year shows that the average annual salary for full-time bachelor’s degree graduates from the eight UGC-funded universities was HKD 314,000 (approximately HKD 26,200/month). By discipline, medicine, dentistry, and nursing had the highest average annual salary at HKD 440,000; engineering and technology were around HKD 271,000; social sciences and arts were lower, around HKD 240,000–250,000. For reference, according to employer surveys cited in the University of Hong Kong (HKU) Career and Placement Section, the median monthly starting salaries for entry-level positions in the financial services and information technology sectors in 2023 were HKD 22,000–28,000 and HKD 20,000–26,000, respectively.
In Shenzhen, according to the “2023 Shenzhen Human Resources Market Wage Guidance Prices” published by the Shenzhen Municipal Human Resources and Social Security Bureau, the high-end guidance monthly salary for university bachelor’s graduates across all industries was RMB 14,814, with a median of RMB 8,472. For postgraduates, the high-end figure was RMB 26,583, with a median of RMB 17,100. Taking the postgraduate qualification as representative of IANG graduates (as pursuing a taught master’s degree in Hong Kong is a typical path), the median salary is approximately RMB 17,000, which converts to about HKD 15,640 at an exchange rate of 0.92. This starting salary gap is roughly HKD 10,000 per month in absolute terms: the starting salary for a master’s graduate in Hong Kong is around HKD 25,000–30,000 (UGC bachelor’s data is conservative; master’s starting salaries are typically 10%–15% higher, i.e., around HKD 29,000/month), while the starting salary for a postgraduate in Shenzhen is equivalent to HKD 15,600–18,400. There is a significant initial cash inflow gap between the two.
This gap is not static. According to the Census and Statistics Department’s “Quarterly Report on General Household Survey,” the median income for professionals and managers in Hong Kong aged 25–34 was around HKD 33,500 in 2023, rising to HKD 48,000 for those aged 35–44, showing a “high initial, stable later” slope. In contrast, driven by the human capital premium in industries like the internet and advanced manufacturing, salary growth rates in Mainland China’s first-tier cities have been significantly higher than in Hong Kong over the past five years. Especially in emerging tech roles, salary increases after five years of experience can reach 50%–80%, narrowing the initial starting salary gap to some extent. Therefore, the judgment criteria for the first layer of the decision tree cannot rely solely on static starting salaries. It must also incorporate conditional variables such as the market depth of one’s target industry in Hong Kong versus Mainland China and the transparency of career advancement ladders. If the target industry has a mature industrial cluster in Hong Kong (e.g., international finance, professional services, higher education), the starting salary advantage can be maintained. If the industry’s growth center has clearly shifted to Mainland China (e.g., artificial intelligence, new energy), even with a higher starting salary, the long-term net present value of earnings may be caught up or even surpassed.
4. Second Layer: Housing Costs and Price-to-Income Ratio
Housing cost is the most rigid constraint in the decision to stay in Hong Kong. Data from the Rating and Valuation Department’s “Hong Kong Property Review 2024” shows that the average price of private residential property in Hong Kong in 2023 was approximately HKD 145,000 per square meter of saleable area (higher in Kowloon and Hong Kong Island, lower in the New Territories). A small unit with a saleable area of 40 square meters would cost about HKD 5.8 million. Assuming a 70% first-mortgage loan at an interest rate of 4.125%, the monthly mortgage payment would be approximately HKD 20,000. The average price of newly built commercial housing in Shenzhen in 2023 was about RMB 58,000 per square meter, according to the Shenzhen Housing and Construction Bureau. A similar 40-square-meter unit would cost about RMB 2.32 million, equivalent to approximately HKD 2.5 million. At first glance, the total price in Shenzhen is less than half that of Hong Kong, but the threshold for buying a home cannot be measured solely by absolute price. Introducing the price-to-income ratio (median house price to median household income) provides a more accurate measure of affordability.
According to the “2023 International Housing Affordability Survey” by the international public policy advisory firm Demographia, Hong Kong’s price-to-income ratio was 18.8 times (meaning a median-income family would need 18.8 years of total income to buy a standard home), ranking it the least affordable city globally. Shenzhen is not included in the formal Demographia survey, but based on data from the E-House China Research Institute and China Housing Price Website, using the 2023 median total housing price and urban residents’ per capita disposable income in Shenzhen, the price-to-income ratio is estimated at 35–40 times, significantly higher than Hong Kong’s 18.8 times. The key to this difference lies in the fact that, under the Mainland statistical definition of “household income,” the growth of dual-income family earnings has not kept pace with absolute housing prices. In reality, the “six wallets” model (three families pooling resources) that first-tier city residents rely on to buy homes further blurs the surface-level price-to-income ratio. However, from an individual decision-making perspective, if a Hong Kong graduate were to purchase a home solely on their own income, the burden in Shenzhen might not necessarily be lighter. From a rental perspective, the median monthly rent for a 30-square-meter unit in urban Hong Kong is about HKD 11,000 (based on the Rating and Valuation Department’s rental index). The rent for a similar-sized unit in Shenzhen’s Futian or Nanshan districts is about RMB 5,000–6,000, equivalent to HKD 5,500–6,600. Hong Kong rent is roughly double. Therefore, the cash flow pressure of living in Hong Kong is significantly higher in the short term. However, if we introduce the condition of “eligibility for Home Ownership Scheme (HOS) or subsidized sale flats within seven years,” Hong Kong’s quasi-public housing supply provides a buffer path, while Shenzhen lacks a similar system.
5. Third Layer: Children’s Education Costs and Access Channels
For graduates with family planning, children’s education expenses are a key variable affecting intertemporal utility, presenting vastly different cost structures and system pathways between Hong Kong and Shenzhen. The fee schedule for international schools published on the Hong Kong Education Bureau (EDB) website shows that the median annual tuition for primary school at local international schools in the 2023/24 academic year was approximately HKD 180,000–220,000, and HKD 220,000–260,000 for secondary school. Some English Schools Foundation (ESF) schools are relatively cheaper, with primary school fees around HKD 120,000–130,000. If one chooses local Direct Subsidy Scheme (DSS) or aided schools, annual fees are nearly zero. However, admission depends on the strict Primary One Admission System, and non-Chinese speaking students face additional costs in adapting to the local curriculum. In Shenzhen, international schools or bilingual schools offering international curricula have annual tuition fees ranging from RMB 180,000 to 300,000, equivalent to HKD 195,000–325,000. Furthermore, prestigious international schools (e.g., Shenzhen Shekou International School) have highly competitive admissions, requiring applications years in advance and additional capital levies (a one-time fee of RMB 150,000–300,000). Hong Kong’s structural advantage in this dimension lies in the fact that children of Hong Kong permanent residents are entitled to 15 years of free education and a higher undergraduate admission rate under the local Joint University Programmes Admissions System (JUPAS) (approximately 15,000 UGC-funded places, compared to the extremely competitive top-tier admission rates in Mainland China’s “Gaokao provinces”). In contrast, children of hukou holders in Mainland China’s first-tier cities can only participate in the highly competitive Gaokao pathway, while the international curriculum pathway is costly and offers less predictable university outcomes. Therefore, for graduates planning for their children’s education, the total net present value of long-term education expenditure in Hong Kong may be lower, and the outcomes are more predictable.
6. Fourth Layer: After-Tax Net Disposable Income Model
The tax wedge is a core variable in the study of cross-border labor mobility. Hong Kong’s salaries tax uses the lower of progressive rates or a standard rate: progressive rates start at 2% and go up to 17%; the standard rate is a flat 15%. The annual basic allowance is HKD 132,000. Married couples can file jointly and benefit from various deductions, including a child allowance of HKD 120,000 per child. For a single person with an annual income of HKD 600,000, considering only the basic allowance and Mandatory Provident Fund (MPF) contributions (capped at HKD 1,500 per month), the effective tax rate is typically between 5% and 7%. Since the 2019 reform, Mainland China’s individual income tax (IIT) applies a 7-level progressive rate from 3% to 45% on comprehensive income, with an annual basic deduction of RMB 60,000. Taking Shenzhen as an example, for a single taxpayer with an annual income equivalent to HKD 600,000 (approximately RMB 550,000), without considering special additional deductions, the taxable income is about RMB 490,000. This falls under the 30% marginal tax rate, with a quick deduction of RMB 52,920, resulting in a tax liability of about RMB 89,000 and an effective tax rate of around 16%. Adding personal contributions to the housing provident fund and social insurance (Shenzhen: pension 8% + medical 2% + unemployment 0.3%), the actual disposable income is further reduced by about 10 percentage points.
Incorporating housing and children’s education expenses into a typical scenario simulation: Assume a master’s graduate’s starting salary is HKD 29,000/month in Hong Kong, with an annual income of HKD 348,000. In Shenzhen, the starting salary is RMB 17,500/month, with an annual income of RMB 210,000. After deducting salaries tax of about 5%, the Hong Kong side has HKD 330,600 remaining. Subtracting annual rent of HKD 132,000 (monthly rent HKD 11,000) and basic living expenses of HKD 120,000, the annual net surplus is about HKD 78,600. After deducting IIT and social insurance of about 14%, the Shenzhen side has RMB 180,600 remaining. Subtracting annual rent of RMB 66,000 and basic living expenses of RMB 72,000, the annual surplus is about RMB 42,600, equivalent to HKD 46,300. Even considering Shenzhen’s potential purchasing power advantage in daily expenses like food, Hong Kong’s net savings in absolute terms are nearly 70% higher. However, if the goal is to purchase property in Hong Kong in the short term, the time needed to save for a down payment will be extended due to high housing prices. The weight of “holding property” as an asset with expected appreciation must be included in the intertemporal choice. Statistics from the Hong Kong Monetary Authority show that private residential property prices have been highly volatile but trended upward over the past two decades. Shenzhen property also experienced rapid appreciation from 2015 to 2020. However, due to Mainland China’s “housing is for living, not for speculation” regulations and recent market adjustments, the uncertainty of asset returns for Shenzhen property has increased significantly, introducing greater variance into the expected capital gains branch of the decision tree.
7. Non-Economic Branches: Status, Healthcare, and Career Mobility
The four layers of quantitative variables above are not sufficient to cover all dimensions of the decision. The decision tree needs to add a crucial branch before the terminal nodes: “status conversion.” According to the Immigration Ordinance, non-local graduates who have ordinarily resided in Hong Kong for a continuous period of seven years are eligible to apply for verification of the right of abode as permanent residents. The Hong Kong permanent resident passport offers visa-free or visa-on-arrival access to approximately 170 countries and regions, providing significant travel convenience for cross-border business professionals. Hong Kong’s public healthcare system operates on a highly subsidized, low-fee basis. The Hospital Authority’s fee schedule shows a specialist outpatient consultation fee of HKD 135 and a daily hospital stay fee of HKD 100, significantly lower than the pricing at international departments of top-tier hospitals or some private institutions in Mainland China’s first-tier cities. Furthermore, Hong Kong has no foreign exchange controls, allowing free cross-border capital flow. This provides a unique professional environment advantage for graduates in fields like asset management and financial technology. While these factors are difficult to weight in a utility function, their impact can be tested through a “branch pruning” strategy in the decision tree: if a decision-maker places extremely high weight on non-economic preferences such as healthcare, travel convenience, and capital freedom, the net advantage of the stay-in-Hong Kong path is further consolidated.
8. Summary of Hierarchical Decision Paths and Sensitivity Analysis
Combining the four main layers of variables, a simplified decision path can be expressed as follows:
- Path A (Strongly biased towards staying in Hong Kong): Starting salary is significantly higher than in Mainland China (>25%), and the target industry has long-term market depth in Hong Kong. Family planning highly values bilingual (English-Chinese) education and international exposure for children. No immediate plans to buy property, but can accept high rent. Highly sensitive to tax efficiency and capital freedom. Under this path, obtaining permanent resident status after seven years in Hong Kong becomes the core goal.
- Path B (Biased towards returning to Mainland China): The industry’s growth center has clearly shifted to Mainland China, the starting salary gap is less than 15%, or is expected to be closed within five years. There is an urgent need to buy property, and access to Hong Kong’s subsidized housing is not available. Preference for the Mainland public education system for children, or already holds a hukou in a first-tier city. The tax advantage is consumed by high housing costs. Under this path, returning early to capture industry early-stage dividends and equity incentives is a rational choice.
- Path C (Hybrid buffer): Stay in Hong Kong initially to accumulate international experience and net savings, while simultaneously monitoring policy windows in target Mainland cities (e.g., tax incentives, talent housing). Make a decision within three to five years. This path requires a sustained positive net disposable income difference and sensitivity to industry changes.
Sensitivity analysis shows that the most influential factors on the decision are housing price and rent assumptions, followed by changes in personal income tax policies (especially the tax subsidy policy for Hong Kong and Macau residents in the Greater Bay Area). According to relevant announcements from the Guangdong Provincial Department of Finance and the State Administration of Taxation, qualified Hong Kong and Macau residents in cooperation platforms like Qianhai and Hengqin are eligible for a “Hong Kong tax rate” subsidy, where the portion of tax exceeding the Hong Kong tax burden is refunded by local finance. If this policy is expanded to cover a wider area in the future, it would significantly reduce the after-tax income gap under the Mainland choice, potentially altering the direction of some branches in the decision tree.
FAQ
Q1: Does staying in Hong Kong on an IANG visa guarantee finding a job? What is the employment rate?
UGC data for the 2022/23 academic year shows that the full-time employment rate for bachelor’s degree graduates from Hong Kong’s eight universities was 79.8%. This rate was over 95% for medicine, dentistry, and nursing majors, and around 65% for social sciences and arts. The employment rate for IANG graduates is heavily influenced by their major, but the overall unemployment rate is only 2.8%, indicating a state of basic full employment. The Immigration Department does not conduct independent employment checks on IANG holders, but visa renewal requires proof of employment or business operation in Hong Kong.
Q2: How can the “partner factor,” not discussed in this model, be incorporated into the decision?
The partner’s employment opportunities and total household income are important extended variables for the decision tree. If the partner also holds high-skilled qualifications and can obtain a Hong Kong work visa, dual income will significantly improve the affordability of the Hong Kong path. Conversely, if the partner’s employment opportunities in Hong Kong are limited, the net surplus of a single-income family may be quickly eroded by high rent, and the decision should be re-evaluated using a joint tax model.
Q3: Can Shenzhen’s various talent attraction subsidies make up for the salary gap?
Shenzhen and its districts offer one-time living subsidies (typically RMB 15,000–30,000) and rental subsidies (RMB 15,000–20,000/year) for overseas returnees with a master’s degree or higher. Some districts offer more substantial support for PhDs. However, compared to the annualized value of the starting salary gap with Hong Kong (on the order of HKD 100,000), these subsidies are limited in scale. They serve more as a signaling mechanism and cannot reverse the basic model conclusion.
Q4: Do the children of non-local graduates in Hong Kong have the same educational rights as local students?
Children holding IANG or dependant visas generally have the same rights as children of Hong Kong permanent residents when enrolling in local primary and secondary schools. They can participate in the Primary One and Secondary One placement systems. However, for university admission, children holding dependant visas must pay higher non-local tuition fees for UGC-funded places (approximately HKD 145,000–180,000/year) until one parent or the child themselves obtains Hong Kong permanent resident status. Therefore, there may be a window of higher tuition costs for children’s university education during the seven-year stay in Hong Kong, which should be included in the decision tree.
Q5: Does the decision tree model consider soft costs like mental health and social integration?
The model above primarily uses monetizable economic variables and does not directly quantify social integration costs. The social circle for Hong Kong university graduates staying in Hong Kong is relatively tight-knit. However, factors like cultural adaptation, the pressure of living in cramped spaces, and the psychological cost of separation from family in Mainland China can be tested for sensitivity by applying a “quality of life discount factor” as a percentage discount on net disposable income. A general recommendation is to apply a 10%–20% discount and recalculate the net benefit.