The Economics of Higher Education

The Economics of Higher Education

Bartik & Erickcek (2007) recount that in the case of medicine, higher education contributes to economic development by paying graduates higher than average wages and thus, the new income can be spent raising the locality’s consumption and overall economy’s health. The higher education industry itself, however, pays below average wages.

According to Bloom et al. (2006), even tertiary education contributes to economic development. The authors concentrated on Sub-Saharan Africa. Traditionally, it has been believed that only elementary and high school learning mattered for business progress. Higher education in that part of the world is among the world’s lowest, with enrolment ratio in 2005 constituting only five percent; consequently, outbound research is also scarce.

Sculley (1989) was among the first to reinstate the point that information technologies have shifted capital from raw materials and physical force to knowledge. Surely, in a meritocracy where information and knowledge are highly valued, higher education reigns supreme. In the past, say in the Middle Ages, few could afford a formal education. People who were literate were most likely clergymen or aristocrats. In today’s world, high school and university diplomas are prerequisites for many jobs.

Sociology, the social science studying societies, cultures, living arrangements, mores, norms and rules, maintains that there are manifest and latent functions. The manifest function is the one the object was intended to fulfil. The latent function is either a covert motive or an unintended consequence. For example, while the manifest function of high school is to educate, it is believed that the latent function is to find a life mate. Many North Americans, Australians and Europeans admit being married to their high school sweetheart. Surely, most people’s friends are those they made during that time. Along these lines, a latent function often ascribed to higher education is keeping young people off the job market. Similarly, elementary school is said to be a babysitting facility.

The need for higher education is visible. Photo by Elena

For those still convinced that education enlightens and serves a higher purpose, in addition to almost guaranteeing a better income and meaningful employment, there are centres specifically designed to help students prepare for, and take, exams such as the internationally standard GMAT (business grad school), GRE (arts and sciences, MA, MSc, PhD), and LSAT (law school).

The Ivy League includes some of the best universities in the entire world (Harvard, Yale, Princeton, Brown, Columbia, Cornell, Dartmouth, Pennsylvania). Some other top U.S. choices are Massachusetts Institute of Technology (MIT), Stanford, University of Chicago and University of California, Berkeley. English elite university circle Red brick (Birmingham, Manchester, Liverpool, Leeds, Sheffield, Bristol) is another prestigious conglomeration. However, Britain’s best are Cambridge, Oxford, London School of Economics (LSE) and University College London (UCL). Rumour has it, that to get into one of those unattainable schools, one has to start early, take on an as rigorous as possible course load, show mastery of the material with stellar grades, and participate in relevant extracurricular activities. Of course, there is also the question of how to pay for tuition. Financial help is available at most educational institutions in the forms of scholarships, bursaries, loans and grants, for those who fit the conditions.

The BCom, BEng, BPharm and so on are professional degrees. Other degrees such as a BA in anthropology or sociology are more theoretical in nature. Whether it is easier to find work with a liberal arts or an applied science degree is debatable, but some majors are clearly more marketable than others. Best to choose wisely!

References:

    Bartik, T. J. & Erickcek, G. (2007). Higher education, the health care industry, and metropolitan regional economic development: What can “Eds & Meds” do for the economic fortunes of a metro area’s residents? Upjohn Institute Staff Working Paper No. 08-140, p. 1-98.

    Bloom, D., Canning, D. & Chan, K. (2006). Higher education and economic development in Africa. Human Development Sector: Africa Region.

    Sculley, J. (1989). The relationship between business and higher education: A perspective on the 21st century. Communications of the ACM, 32 (9): 1-6.