Re: “Arms Race for Qualifications”

In a February edition of The Economist “Arms Race for Qualifications” discussed the phenomenon in developed countries (OECD countries) of the decreased “graduate premium”. The graduate premium is the difference between the average earnings of someone with a degree and someone with no more than a secondary school education (after accounting for the fees and the income forgone while studying). The issue raised by the article is that higher numbers of people are attending universities leading to lower returns for graduates and governments. According to data compiled by the OECD’s Education at a Glace Report “many of the countries with the lowest graduate premium were also those with the largest shares of people educated to a higher level.” (Times Higher Education, September 2017)


University for many secondary school graduates seems as the logical next step, whereas for many of these individuals vocational or trades education (i.e. plumbing, auto-servicing, manufacturing) might be a better step. For many individuals entering university, their course of programs or discipline will change, and most students will not have a clear idea of what exactly they want out of their education. And if they do have any idea, that idea is likely to be convoluted or abstract, lacking clear knowledge of what a particular career will entail.


In the pyramid of those who are likely to best within the economy and job market graduates are at the top, individuals who do not earn post-secondary education are in the middle, and individuals who drop out of university are at the bottom (and are the most disadvantaged). Individuals who leave university prior to completion are not only out of their tuition fees (another issue within itself) but are also out of the earnings they could have made had they chosen to begin working rather than attend university. These individuals could have been empowered with more professional experience had they entered the workforce earlier and made the decision to not attend university. ‘Drop outs’, as a facet of the economy, point toward the fact that university should not be touted as the ‘logical next step’. There are many other forms of education (i.e. vocational training) and on-the-job training that might have served these individuals better. Without a societal and government move towards creating awareness that there are options other than a post-secondary education we are likely to keep seeing a decrease in the graduate premium.


Another issue raised is that innovation is much more difficult in a highly developed economy with an advanced technological infrastructure. It’s easier to innovate when there’s not a lot there than when there is a lot there. An so new jobs that require certain knowledge (i.e. anthropological or historical understanding) are not created ata rate high enough or matching the number of students graduating with a particular degree each year. In my year alone there were over 500 students all graduating with a political science degree. What this means is that there’s a surplus of graduates with a specific academic background, but not enough innovation in the job market so that these graduates will work jobs relevant to their educational background.


The outcome of a surplus of graduates in society can be seen at an almost any coffeeshop: individuals with a specialized (and expensive) academic background are working unskilled jobs. Jobs, such as administrative assistants or secretaries, that did not require a degree 50 or even 30 years ago now require a degree. Recruiters also use a degree in order to ‘weed out’ potential candidates: the degree is seen as the first net through which potential candidates must pass through, and the second net is professional experience.


“Going to university is more important than ever for young people. But the financial returns are falling.”


The most important questions raised by the article include:

  • What are the social returns of higher education?
    Professors, at least in my experience, are aware and forthcoming about the decrease in the graduate premium. Often professors speak of the social returns of higher education: unviersities help created informed individuals who are equipped with the knowledge to be better citizens. High education serves to inform and increase the depth of knowledge of students, and as these students go forward as graduates into the world, their ability to make good decisions will be heightened by their education.
  • What are the discrepancies between policies surrounding higher education and the actual social returns as experienced by graduates?
    Governments subsidize education with the understanding that a university education results in social returns. If the return a graduate is getting on their degree is a job that did not require a degree 50 or 30 years ago, then that return does not match the economic commitments made to the public education system. Further, there is a potential that these discrepancies in the anticipated and actual social returns of higher education will lead to a stagnant younger class who does not feel that they have the power to effect change in their economy.
  • How can governments in OECD countries innovate more efficiently to ensure that individuals receive jobs that fit their capabilities?
    This is the golden question that governments and graduates must deal with today in order to ensure money is not thrown into a system that is not producing the expected returns.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s