Comments on: Are there too few university students? (Again)

By: Andrew Norton

Andrew Norton — Wed, 11 Jul 2007 21:49:34 +0000

Eric - I agree that labour market demand will in some respects be shaped by supply. The innovation survey the ABS did of business, for example, found that lack of suitable staff was one of the obstacles to it, and presumably in the areas of the labour market where we have shortages some projects have been postponed or cancelled - so the potential employment is greater than the vacancies in existing operations suggests.

The caveat is of course in the ‘highly qualified’ - if expansion mostly draws in people with weak academic backgrounds I don’t think it will make much of a net positive difference, if any. That’s why we have to keep going back to the issue of allocation. Some of the people doing Science, for example, should be doing health courses instead.

By: Eric

Eric — Wed, 11 Jul 2007 12:59:21 +0000

Enjoyed reading your paper on this issue. I also think the ‘50% or 60% participation rate’-objectives of many governments are very valuable in itself. Yet, I don’t think either that the number of graduates needs to be exactly adjusted to future labour market demands. As I wrote in my own blogpost on this issue, I think the labour market should not be seen as an exogenous variable in this problem. If you deliver enough highly qualified (!!) graduates, the demand for future graduates will rise as well. At least for many occupations. Raising the number of graduates can thus be a good policy, as long as the quality of the graduates is high.

By: conrad

conrad — Wed, 11 Jul 2007 11:49:22 +0000

It shows you that the main effect of a market solution would be to reduce oversupplied places in some areas, not increase places in ones where there is high job-market demand. That’s not neccesarily a bad thing in my books, although it is going to politically unpopular, especially given that the main fee paying place creation is going to be in places where the public oddly enough doesn’t want to see fees (i.e., medicine). In addition, whilst it is neutral in terms of market vs. current central planning mechanisms (i.e., funding per student), it is at odds with your claim (presumably to support a market-based solution) that there is a demand problem that couldn’t be met in the current system:
“In most of the areas of labour market shortage, there was plenty of demand for university places, but no capacity to respond to that demand”

By: Andrew Norton

Andrew Norton — Wed, 11 Jul 2007 09:56:11 +0000

Conrad - Are you arguing for my position or your position? If as you say the universities want more students, doesn’t that support my case? For the medical specialities, there is anti-competitive conduct through the various colleges, though I am not on top of the detail. And in cases where there is too little demand, that is neutral between the arguments, since conscription of students (as opposed to institutions) into specialities is not a feature of either the centrally planned system (with the partial exception of the bonded rural places) or the market system.

By: conrad

conrad — Wed, 11 Jul 2007 07:56:22 +0000

I think it is worthwhile looking at a breakdown of oversupply.
What you say is true for some of the medical professions, but not neccesarily so of the broader picture. According to the immigration department, these are the following high demand professions:

http://www.immi.gov.au/skilled/general-skilled-migration/skilled-occupations/occupations-in-demand.htm

Excluding the medical ones, I think most of these professions are ones where universities probably want more students, not less. Even of the medical/allied health professionals, most of these are already full fee courses (like speech pathology), or a medical specializations needed that medical students don’t want to do (psychiatry, obsterics).

By: Andrew Norton

Andrew Norton — Wed, 11 Jul 2007 06:26:25 +0000

Conrad - In general terms, I agree that no system can allocate perfectly, which I explain in my paper. But some can do better than others. I show that high-quality applicants (ENTERs 90+) are being rejected from courses leading to high-demand professions (ie demand exists) and that universities were offering places to full-fee students in those disciplines (ie there was willingness to supply more). A market would have done a better job than the system we in fact had.

Actually, lawyers are appearing on shortage lists. It’s an interesting labour market - oversupply at the point of entry to the profession, but such high attrition that they end up with shortages of experienced solicitors. But that’s clearly a problem the profession has to deal with, and not something that is the responsibility of policymakers.

By: conrad

conrad — Wed, 11 Jul 2007 06:10:22 +0000

Andrew,

you’re still blaming the government for misallocation. My bet is that in a totally deregulated market there would still be misallocation (and I doubt the extent would differ too much — cf. the US situation), because it is caused in part by students either wanting an unrealistic career (e.g., there will always be a surplus of lawyers), the poor cultural view of some subjects (e.g. science), and the poor high school system where there simply are not enough decent students that have done the right subjects (e.g., shortage of engineers).
You shoud check out universities apart from Melbourne U — many can’t get enough students in “high job demand” areas like engineering. So whilst this statement might be governement propaganda, it isn’t a problem caused 100% by government regulation.

By: Balneus Graduate underemployment and Andrew Norton «

Balneus Graduate underemployment and Andrew Norton « — Wed, 11 Jul 2007 05:20:56 +0000

[...] recent post Are there too few university students? (Again) is an example. I’ve made comments elsewhere about the number of graduates pulling [...]

By: Andrew Norton

Andrew Norton — Wed, 11 Jul 2007 05:13:27 +0000

Damien - The evidence suggests that for the overwhelming majority of students employment is a or the major consideration. That’s not inconsistent with the research showing that interests are the major driver of which course students choose.

And for the purposes of my argument with Birrell, it would help my case rather than his if extra enrolments would simply be people taking courses out of interest.

By: Damien Eldridge

Damien Eldridge — Wed, 11 Jul 2007 04:10:07 +0000

As I’ve noted before, this assumes that the main purpose of tertiary education is vocational training. I don’t think that is the case for all degrees. While some people might wind up in a job directly related to their degree, is this because they took the degree to get the job or because they took the degree and the job because they are in an area that interests them? Many degrees provide generic skills that are relevant to many jobs even if the degree is not required for the job. I think students are better off choosing the subjects that interest them most, even if they are worried about the employment prospects. After all, would you really want to work in an area you despised?