Saturday, August 27, 2016

Graduate wage premium

I liked the Guardian article ‘Value for money’ can’t be the only measure of university, one reason being that it calls attention to Michael Oakshott’s 1950 essay The Idea of a University, which I now reckon should be read by every university student, or prospective student. No so much due to it being likely that they would buy into “the gift of an interval” as just that it presents a radically alternative viewpoint on the question of why people go to university; alternative, that is, to the current conventional wisdom that it’s about buying a ticket to a higher-paid job.

Graduates still benefit from a “wage premium”, despite increases in the proportion of people who go to university (article in FT, article in Guardian). This was found to be the case in a new report from the Institute for Fiscal Studies (link to press release) arguing that the continued wage premium is due to structural changes in organisations, or maybe due to increased demand (for graduates) increasing to meet the increased supply. The Guardian article notes that the IFS reckon that further increases in university take-up may reduce the graduate premium. I came up with the following observation (which doesn’t seem to have been suggested in the comments attached to the articles linked-to above). Suppose 99% of us went to university, then it seems likely that a “healthy” graduate premium would continue to exist. (The remaining 1% would be at risk of being seen to be missing some capability that nearly everyone has, and one would expect their average pay to be lower.) The point of that observation is to challenge the idea that we should care about the graduate premium.