The New York Times website had a great little graphic the other day about youth unemployment rates in urban China. It looked like this:
Unemployment in Urban China, 20-24 year-olds
For people who see higher education entirely in terms of “work outcomes”, this kind of chart is deeply perplexing. If higher education doesn’t pay, why do Chinese students keep lining up for university?
There are really two sets of answers.
First, one shouldn’t conclude from this chart that higher education is a bad deal. Say, for instance, the pay of a higher education graduate is twice that of a high school graduate. On a risk-adjusted basis, higher education is still a great bet: staying a high school graduate means a 92% chance of getting $X, moving on to higher education means an 84% chance of getting $2X. People will still line-up to go because the rewards and the odds remain pretty good. Either tuition or graduate unemployment would have to go up a lot to dissuade people from attending.
(Governments might legitimately look at numbers like this and question why they’re subsidizing education, but that’s an entirely different question. And even then, you’d need to take into account the fact that, at a certain level, governments deliberately over-produce graduates because the resulting wage pressure on educated graduates does drive competitiveness.)
Second, and this is a problem a lot of policy wonks have trouble understanding – not all returns are financial returns. Society accords different levels of respect to different jobs, and people want respect at least as much as they want money. Most people would pay quite a bit to not have to do manual labour, for instance. They’d also pay to get a title to which society accords respect. Hence, in most of the world, there’s a general preference for being an unemployed lawyer rather than an employed plumber (unemployment being a temporary condition and all).
In some cultures, the non-monetary rewards go a lot further. In Confucian societies, higher education is an ethical good; a university diploma is not just a mark of intelligence and hard work, but it denotes moral excellence, as well. OK, this ethics stuff is really just an echo of class propaganda from two millennia ago (it obviously suited Han-era officials to pretend that they were ethically superior to the rest of Chinese society, as well as richer and more powerful). But it’s still a powerful pan-East Asian driver of what, in South Korea, they call “Education Fever” – the drive to have as much education as possible, regardless of the cost.
But whether you’re in China or Canada, the demand for higher education is almost never just about jobs. Smart policymakers would do well to remember that.
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Before placing a lot of stock in data like this, I’d want to see the underlying numbers. Is it possible that the ‘unemployment’ rate of post-secondary students is higher than high school grads–when looking at 20-24 year olds–simply because post-secondary students are largely still in school at this age, whereas high school grads are in the workforce? And, even if it’s a ‘better’ number (counting only people available for work in the denominator) all it might tell us is that graduates of bachelor’s degrees need more than a year or so to find the employment they’re looking for. Unless I’m missing something, the data here seem pretty unremarkable.
Hi Peter,
Thanks for reading our stuff. “Unemployment” implies that they are seeing work (meaning they are out of school). And yes, it’s a truncated group because most university students graduate at 21 or 22 in China and undoubtedly, some of what you’re picking up here is that “transition to school” problem. But in Canada, for that age group, you’d still see the reverse pattern (higher education means lower unemployment) even with the “transition to work issues”.