This article draws on a "within-subject" design of employment of university graduates in China over two different periods, namely 2008 and 2014. This research was conducted based on semi-structured interviews and secondary data analysis with four groups of key stakeholders including universities, government agencies, labor-market intermediaries and university graduates. The "within-subject" design enabled an in-depth exploration of how changes at formal and informal institutions affect the employment of university graduates in a fast-changing labor market. The results show that lack of institutional interactions, socially constructed norms that influence graduates' perceptions and ambiguous directions of educational policies significantly affect university graduates' employment.