What’s a College Education Worth?

Source: The New Yorker, Sep 2015

So what purpose does college really serve for students and employers? Before the human-capital theory became so popular, there was another view of higher education—as, in part, a filter, or screening device, that sorted individuals according to their aptitudes and conveyed this information to businesses and other hiring institutions. By completing a four-year degree, students could signal to potential employers that they had a certain level of cognitive competence and could carry out assigned tasks and work in a group setting. But a college education didn’t necessarily imbue students with specific work skills that employers needed, or make them more productive.

Kenneth Arrow, one of the giants of twentieth-century economics, came up with this account, and if you take it seriously you can’t assume that it’s always a good thing to persuade more people to go to college. If almost everybody has a college degree, getting one doesn’t differentiate you from the pack. To get the job you want, you might have to go to a fancy (and expensive) college, or get a higher degree. Education turns into an arms race, which primarily benefits the arms manufacturers—in this case, colleges and universities.

If higher education serves primarily as a sorting mechanism, that might help explain another disturbing development: the tendency of many college graduates to take jobs that don’t require college degrees.

“What employers want from college graduates now is the same thing they want from applicants who have been out of school for years, and that is job skills and the ability to contribute now,” Cappelli writes. “That change is fundamental, and it is the reason that getting a good job out of college is now such a challenge.”

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