Economics Strikes Again.

A new report out showing that the expansion of higher education has led to less of a wages premium for those who go and get it:

The Government’s policy of urging an ever-increasing
number of young people into university – a record 400,000 this year –
is failing in significant respects as graduates flood the job market,
research published by the Department for Education showed yesterday.

Four
years after graduating, nearly a third of "the class of 99" were either
in "non-graduate" jobs or jobs that were not appropriate for someone
with their qualifications.

There was also clear evidence that the "graduate earnings premium" – a
measure of the financial advantage of having a degree – had begun to
fall.

Truly, who could ever have thought it would work out this way? Increase the supply of something and the price changes. Stunning result don’t you think?

The report said the dividing line between graduate and non-graduate jobs had become increasingly "blurred".

One
reason was that employers were responding to the glut of graduates by
raising the qualification requirements for jobs that would
traditionally have been done by non-graduates.

And we get an increase in credentialism. Just what we need of course, an insistence on a piece of paper as an entry ticket to a job rather than any innate ability to do the job or be effective at it. A quite wonderful addition to the efficiency of the economy.

Do go and read the full article to see quite what a horlicks of a comment this is:

Bill Rammell, the higher education minister, said: "This research
provides compelling evidence that graduates are benefiting from the
skills, knowledge and experiences that they have obtained through
higher education."

Is he actually reading the same report?

 

5 responses

  1. Tim,
    More in higher education = lower graduate wages.
    Lower graduate wages = blurring of distinction between graduate and non-graduate jobs
    Blurring of distinction between graduate and non-graduate jobs = lower wages all round.
    So why do we still allow mass immigration by the unskilled? In what possible way is this practice good for us, the British people?

  2. Tim,
    There’s that “compelling evidence” again.
    Blair found the evidence for 90 day lock-ups “compelling”. Perhaps it’s replacing “rebalancing”-as in rebalancing the criminal justice system-in the New Labour lexicon of drivel
    t

  3. The wage premium for graduates was always bad econmics and like most Nu Labour schemes has failed to survive contact with reality. Several years ago we saw that Scotland, the test bed for many Nu Labour plans, was seeing graduates getting paid the same as school leavers since they provided no more in terms of value added. Funny that.

  4. Some ex colleagues did some work on the graduate labour market in Scotland.
    We found that the ‘graduate’ job is a nonsense – the professions, legal, etc and the milk round alway scoop up the elite graduates and then there’s the rest.
    In otherwords – the graduate labour market is highly segmented. There are many submarkets.
    But the problem is that there’s still the illustion that all the 400,000 will access the top corporate graduate trainee posts etc which is patently nonsense.
    However – other research has shown that many graduates nowadays have to start at a lower level, but do in fact still climb the greasy pole.
    The key thing is utilisation of skills – are we are in an efficient situation, where the education that is being invested in is being utilised on the job?
    The truth in Scotland was a glut of graduates – so many headed south.
    We allow mass immigration by the unskilled, because our unskilled who are willing to work for lower wages are decreasing in number, so we suck in immigrants to do the work. Demand – supply etc. Quite straightforward.

  5. Rob Read Avatar
    Rob Read

    So why don’t we auction off the right to immigrate?
    Good for immigrants (it would be quick and simple) good for the UK.

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