Debunking a higher education myth debunking

There were two higher education research papers reported today. Most publicity went to Bob Birrell and Virginia Rapson’s Clearing the Myths Away: Higher Education’s Place in Meeting Workforce Demands, which Birrell summarises here. According to Birrell, attacking the ‘myth’ that too much attention has been placed on higher education and too little on trades:

Between 1996-97 and 2005-06, overall employment increased by 20 per cent but the number of professionals, associate professionals and managers grew at nearly double this rate. By 2005-06, 38 per cent of all employed were in one of these three occupational groups.

To meet this demand, however, there has only been a marginal increase in university commencements by domestic students over the past decade. The Federal Government has maintained an effective cap on the number of university places for domestic students since it came to office.

Certainly, employment growth in the occupations traditionally targeted by graduates has been strong. But what Birrell and Rapson never mention is the actual number of people completing university qualifications. In virtually every year, these numbers exceed, usually by a large margin, net job creation in the relevant occupations. Sure, there are more vacancies than the annual increase figure would indicate due to retirements, women going on maternity leave, people moving overseas, etc. But not enough to stop us having a large ‘reserve’ graduate workforce, of about 400,000 people with degrees working in occupations that are highly unlikely to require them such as clerical and sales (you can work it out from this ABS report).

What we have in Australia is not a general shortage of graduates, but shortages in particular fields. This in turn is a failing of the quota system – a topic that I am sure anyone who has read me regularly is by now thoroughly bored with. Though in recent years, as Birrell and Rapson acknowledge, the government has been busy creating new university places in areas of workforce shortage, there is at least a 3 year lead time, and in some disciplines (like medicine) much more, before these students enter the professional workforce. The policy failing of the second half of the 1990s wasn’t too few university students overall, it was not letting the system adjust to meet the demands placed on it.

Birrell and Rapson also say that ‘many’ potential students with modest academic records ‘are likely to have been discouraged from attending university by the HECS debt they will accumulate…’. This paper by Chris Ryan and Buly Cardak, reported on here today, certainly shows that there is a strong relationship between ENTER score and university participation. But it’s very hard to show that the prospect of a HECS debt has negative consequences. Many people, for instance, claim that low SES students are more debt averse than students from more affluent families. But this paper shows that for a given ENTER score low SES and high SES school leavers have nearly identical rates of university participation. Though potential students with modest academic records cannot be expected to know statistics on university progress or employment outcomes, perhaps they intuitively understand that they are likely to not do as well at their university studies as their peers with stronger academic records, and risk ending up in jobs that are little better than those they could get straight out of school?

13 thoughts on “Debunking a higher education myth debunking

  1. I am inclined to be wary of the category “manager” because there are glorified clerks who call themselves “Credit Managers” and the like. You certainly don’t need tertiary quals for that kind of job.

    What about the stories about graduates who have to go to TAFE to get some marketable skills.

    Keep on saying what has to be said Andrew, you might get bored saying it but someone has to do it!

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  2. Rafe – About 6% of people enrolling in TAFE have a degree, though I don’t necessarily think there is anything wrong with this. Not everyone goes to university to improve their job prospects. The point of the post was just to be sceptical of a paper that calls for more graduates without looking at how many we have already.

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  3. I think I should point out that not only do abundant degree-holders drive down the value of a degree, they make it much harder to distinguish the quality of an applicant.

    When I started studying computer science in 2000, the course was filled with kids who thought it was an easy way to get rich. They didn’t care about the subject, cheated and copied from each other, and tended to do very poorly indeed. But many passed.

    Now even if I get a degree from the University of Sydney, what good is it if I can’t distinguish myself from the gold-rushers? Computer science is a demanding subject, and research has shown that good programmers are at least 10 times more productive than the average programmer. Personally I think that since the dot com boom that ratio has become even more extreme – I come across some fairly hideous code and amazingly ignorant and ill-educated people clutching a degree.

    The problem for employers is that whereas degrees used to signal a rare level of interest or mastery of a subject, this is no longer so. To stand out in computer science one can only try going to the next level of an MSc, or (increasingly) try to establish a reputation through contributions to open source projects.

    But the degrees themselves have become less valuable. I find it very distressing.

    As an aside, you should look at IT certification as a model for a free, distributed market model for higher education.

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  4. Jacques – You might recall a post I wrote last month on graduate earnings, where I argued that a relative decline in the bachelor degree premium was due to growth in the number of p/g degree holders – perhaps partly people engaging in the kind of signalling that you are talking about.

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  5. I have a very slightly different take on your experience Jacques (mainly more general).

    My suggestion is that Birrell is right in that there are not enough decent graduates. However, I only think he is correct because for many areas, the productivity of a fair chunk of the population that does a degree is basically zero, and it isn’t just computer science — its probably a fair chunk of areas that require any sort of brain power.

    The main problem is that:
    a) Universities are never going to set standards that cause the majority of students to fail, even in areas where you could reduce the left side of the distribution significantly.
    b) The only solution to (a) is that some universities somehow market themselves as producing graduates are so much better than all of the others that they are selecting the right side of the distribution, which is never going to happen (since it would mean huge student culls like used to happen in the early 80s),
    c) It might not even be possible to choose between the winners and losers in certain fields where a lot of basic knowledge is needed within the time of a normal degree.
    d) It is almost impossible to tell who will be a winner and loser in many fields based on the type of entry requirements universities use (e.g., 18 years old; TER = 95. Will you become a good biologist?)
    e) (d) is compounded because the high school system doesn’t differeniate who is likely to succeed at university (I seem to remember that r = around .3 for many courses), let alone who will actually be good at what their degree supposedly taught them.

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  6. It is a most unfortunate situation where you have to get a higher degree just to stand out above a heap of mediocre graduates. It suppose it is a form of inflation! Work experience with reliable references could help.

    I am not worried about grads going to TAFE, it makes sense to get the education and training that you want or need wherever it is most conveniently available.

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  7. Andrew, the Cardak and Ryan paper does find (as you say) that low income people with good ENTER do not seem to be deterred from going to university by credit constraints or the prospect of running up a HECS debt.

    However, while not directly relevant to your topic today, Cardak and Ryan also find that socio-economic disadvantages play a big part in determining ENTER scores. In lieu of university scholarships or the like, the authors recommend earlier intervention policies to target the social barriers during pre-primary, primary and secondary schooling in order to equalise education opportunities. I know that you agree there is a serious problem there, Andrew, but you are worried about ‘government failure’. This is understandable, given some past experience, but I don’t see government failure as a greater problem than market failure in education – not by a long stretch.

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  8. Jacques,

    Even when I did an IT related degree back in the late eighties it was exactly the same situation: lots of graduates looking for the easy bucks and employers booming/busting and hiring/firing without a lot of discriminiation between job applicants. Most of the good employers will pick experience over the source of your degree any day (and will look at the places you previously worked as an indication of fitness). It just takes time to establish the kind of resume that will turn into a solid basis for employment. I’ve seen at least three shakeouts in that time (the worst one was the dot-com bust, but there were other ones related to technology shifts). I kept up mostly due to luck and continuing education.

    It doesn’t help that the IT industry tends to favour youthful looks but hankers after experience. Some of us are lucky (still have all my hair and most of it isn’t gray, which helps).

    When I was working in the finance industry in IT, most of the really successful careerists did as little programming/support work as possible and got sponsored to do a Masters degree in finance or business administration. IT (programming/admin work) is a long career to nowhere unless you can make the management jump or don’t care and just like to program (like me). There’s a lot of frustrated careerists in the industry all doing the same thing so the degree inflation cycle continues.

    As an aside, after 11 years of living in Sydney and working in IT for the big end of town, I finally realised that my goals were so completely out of tune with theirs that we left the city altogether and I and my family are much happier. (i.e. for us, money isn’t everything and the whole “deferred happiness” paradigm that seems to drive much of modern life turned out to be deeply unsatisfying). As they say in the classics, your mileage may vary.

    The only real advice I can give is (a) pick quality employers, don’t make your choices based just on the salary. (b) be prepared to learn everything and don’t tie yourself down to some hot technology (guaranteed way to unemployment).

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  9. Fred – But this is a problem that is coming directly out of the government school sector, so you can hardly blame me for thinking that the government is the problem rather than the solution.

    I think it would be fascinating to do a chapter on education for one of those what if? history books, in which the government never became involved in delivering education but instead funded students to go to private schools.

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  10. It’s a bit strange to say in one breath that you should deregulate the cost of a degree in the form of fees so as to enforce rational decision making, and in the next to argue that HECS hasn’t affected peoples’ choice.

    As to whether supply has kept up with demand, the obvious marker is relative wage movements. Given Australia has increasing wage dispersion (like most other countries) then prima facie it doesn’t look like we’ve been churning out too many graduates.

    But Fred’s right (as often) – the real inequalities of educational opportunity occur before tertiary level. Australian governments’ record in the last decade or so on this front has been just dreadful.

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  11. Andrew,

    Are you really going to write some Ayn Randian fairytale about a completely non-government education system? Will we have steel-biceped principals of principle?

    I still fail to see how private schools can deliver any better outcomes than the current system which allows plenty of choice if you don’t like the local school.

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  12. Andrew, I’ll concede that replacing the government school system with an equivalently-funded voucher system would probably get a higher mean level of education than the current system. But:

    – the *variance* would be much, much greater as those with the means pitched in extra for their own kids.
    – the massive segregation that would ensue between middle-class and poor kids would undermine political support for maintaining the vouchers’ value.
    – and this is without taking in to account the agency problems when educating some kids (ie the parents’ decisions are made in their own, not the kids’, interests)
    – nor does it take in to account the atomising effect on society of the lack of a common education (how many kids would have most of their education in the form of a local interpretation of the Bible or Koran under a true voucher system?). This is especially iportant in an immigrant society.

    The late Fred Gruen once noted that a characteristic myth of the Left was that efficiency didn’t matter, while a characteristic myth of the Right is that distribution doesn’t matter. These musings of yours are a classic example.

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  13. DD – If we had a means-tested voucher for everyone (ie what private schools sort-of have now) the variance would be greater than a purely public system, but less than what we have today, because there would be a shorter tail of truly terrible, prospect-destroying schools.

    If everyone was part of the same funding system, there would be *greater* political pressure to maintain its value. In any case, both school systems have had their funding grow in real terms (though most of the cash has been blown reducing class sizes).

    Agency problems are not an issue, because parents who choose the nearest school or a random school are not likely to make any worse a choice than they do today; in fact due to the general upward movement in quality they are less likely to chance on a school that will leave their kids semi-literate and numerate – as many schools do now.

    The public school lobby keeps going on about the socially divisive effects of private education, but fails to produce any evidence whatsoever. As I noted in response to an earlier argument along these lines, state aid to Catholic schools helped *reduce* social division between Catholics and Protestants. Indeed, the only evidence of division caused by private schools is the vicious campaign waged against them by the feral public sector teachers’ unions.

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