Is a college degree good for your wallet? That question has been exercising minds at The New York Times.
On the one hand, as this article argues, plenty of students who start university never get a degree, which means much of their investment ends up down the drain. And, as it also points out, “college degrees are simply not necessary for many jobs”.
On the other hand, as the Times’ Economix blog points out, there’s a simple economic argument in favour of going to college: Graduates earn more. “The real pay of college graduates has risen over the past 25 years,” writes David Leonhardt. “The real pay of every other group has dropped.”
Indeed, as the chart shows, graduates enjoy a considerable “earnings premium” almost everywhere, not just in the U.S. In purely economic terms, such gaps reflect the supply and demand for education. Graduates are relatively scarce compared to non-graduates, and so can command higher wages. (Needless to say, some graduates are scarcer – and more in demand – than others.)
College graduates’ earnings premium: The chart from OECD Education at a Glance 2009 shows that college graduates consistently earn more than people who’ve only finished high school (“upper secondary education”), who are represented by the “100” line. Graduates’ earnings are shown on two bars – “Tertiary-type A” is essentially a traditional degree, taking about three or four years; “Type B” covers shorter term, more skills-based tertiary education. More data here.
So, the economic case for third-level education is strong – it’s good not only for individual prosperity but also economic growth. In recent decades, arguments like that have driven a huge expansion in university education around the world.
But there are limits to the benefits from such growth. University isn’t for everyone, and it’s perfectly possible to earn a good living without earning a degree. (If you want proof, try calling a plumber at 3a.m. and asking how much he’s charging.) And as the philosopher-cum-mechanic Matthew Crawford has written, even people who are well able for academia may find more satisfaction in labour that doesn’t require a degree: “Some people are hustled off to college, then to the cubicle, against their own inclinations and natural bents, when they would rather be learning to build things or fix things.”
Unfortunately, in recent decades the drive to add university places led some countries to reduce vocational training. That’s beginning to change, with an increasing awareness among education policymakers of the need to provide a mix of opportunities catering to both academically and vocationally minded students. Indeed, a team at the OECD has been reviewing policies on vocational training in a number of countries, and looking at their responsiveness to the changing needs of students and employers. To find out more, click here.
educationtoday – OECD’s social media site on education issues
Learning for Jobs – An OECD review of vocational education and training