When purchasing a new apparatus, Companies consider the price of the item, the amount of revenue that the new item can create for the Company eventually, as well as, the scrap value of the new item. Besides, the Company must consider the rate of interest, which the Company uses in computing the present value of the future net income, which can be expected from the new apparatus. The Company will buy the item if the present value is positive, but if the present value is negative, the Company will not purchase the item. Similarly, the decision to go to college depends on the present value of the potential income that a person can receive with a college education. In other words, the relationship between productivity gains and costs determine the significance of attending college, and most productivity gains appear in the form of wages. Hence, we can argue that, for any job, there is no prescribed dividing line separating college jobs from non-college jobs, but; instead, the key issue is the association between the productivity gains that accumulate from college weighed against the costs of attaining that education and this poses the question on whether access to higher education should be promoted through public policy.
Most occupations can be completed by both people with a college education and those without such education, with just few jobs necessitating a college degree. A college occupation is one for which the productivity benefits of employing a college individual are superior to the extra wage that one would have to give to get such an individual (Gould 106). Thus, the most apt way to think about college education is to seek whether, or by what level, college educations increases a person’s productivity on a job and then consider whether the cost of offering that college education can be rationalized by the productivity bump.
Besides, the standard economic theory offers a relatively straightforward way of reflecting on these considerations. Demand and supply places a relative wage for high school and college educated workers, in the labor market. However, several employers are less concerned as to whether they hire high school or college workers, at this relative wage. This is because some jobs may not require any particular expertise to complete, implying that both high school and college workers have the capacity to complete the tasks. More often, the college employee is more productive than the high school employee, due to increased knowledge and skills, but the higher wage makes this advantage invisible.
Nevertheless, there exists other employers who apt for college workers, at the relative wage. These are employers who want their firms to have a professional look, besides offering the best services. Besides, these employers’ recognize that college employees will create more revenue for the Company, as compared to the amount that they obtain as payment. This supports the notion of the theory of investment that Companies must consider the amount of revenue that the new item can create for the Company in relation to its cost, before acquiring the item.
Given what we know about the Returns to College, should Public Policy be designed to Promote Higher Education for Everyone? What are the Pros and Cons of this?
Superficially, the economic point for intensifying college access appears sensible. Currently, most of us are aware that workers with college degrees earn significantly more than less educated employees. This would appear to denote that the demand for college educated workforce is increasing and that a policy to enlarge college access is suitable. This usually happens in Companies that assume college employees have the capacity to create more revenue for the Company.
Nevertheless, the economic point for intensifying college education and policies may appear illogical after considering other arguments. One such argument regards the wage data, since, in latest years the earnings gains of the college educated is equal to non-college educated workers (Marcotte Thomas, Carey and Greg 158). Secondly, we can argue that wage data does not denote productivity that becomes enhanced by learning, but instead, that college education can just be used by Companies as a technique for categorizing workers depending on other standards, such as, race and social class. Close to this is the notion that college education may be used by employees as a means of demonstrating their intrinsic capacity, although, it adds little to knowledge that may be expected in performing certain tasks, at workplace.
Thirdly, we can argue against more expansion of postsecondary education from the perspective of occupational forecasts, which ascertain that job growth, in prospect, becomes anticipated originating from low skill labor (Toossi 37). Put more simply, these concerns raise a worry that if we stridently augment the supply of college educated workforce, we will consequently begin to see more college educated people who work as taxi drivers.
A logical issue, regarding any policy that seeks to augment the accessibility of college education, is whether there will be authentic economic gains or no gains at all. A number of reasons can make college education not to have any economic gains. First, we can argue that the wage gains related with college occur simply because companies use college credentials as a way to categorize people into different, value jobs (Marcotte et al. 159). From this perspective, there is nothing that adds value, with reference to college, and if additional people received college education, then companies would find some other categorization system. This standpoint receives support from critiques of the role of education in enhancing inequality, and we can. Also, argue that investment in education is just a way for well endowed people to demonstrate their powers.
While the evidence above denotes that the demand for college educated workers is increasing, a critique of college education would consider this as suspect since it does not exclude the sorting or signaling claims. For instance, the wage benefit of college educated workers can be because of their intrinsic higher aptitudes or individual traits, rather than mere categorization. However, there is more evidence that allows us to make more confident conclusions. The first evidence demonstrates that cities with high amounts of college educated inhabitants are more prolific. The second evidence concerns the open admissions policy at City University of New York, whereby college enrollment was substantially augmented because of an exogenous policy change, whereby the new learners experienced considerable benefits (Marcotte et al. 160).
There exists substantial support that the economic performance of both cities and states becomes better when the inhabitants have higher degrees of education. In a research, Glaeser and Saiz found that the growth rate between 1980 and 2000 in metropolitan regions with under 10 % of adults owning college degrees was 13 %, while regions that had over 25 % owning college degrees experienced a growth rate of 45% (6). Glaeser and Saiz explored different explanations for this model and also checked for spurious correlations and impacts of set city.
Eventually, Glaeser and Saiz confirmed that augmented college attendance became directly connected to higher heights of productivity mainly because a college educated labor force is better positioned to react to unanticipated economic shocks and opportunities (7).
This situation indicates that supposing college was just a signaling or categorization tool, then a rise in college education ought not to have a considerable effect on productivity. Since there exist a noteworthy productivity and economic modification benefit, which accumulates in more educated cities, is strong evidence that the advantages of college education symbolize real gains.
Recently, the rate of rise in the rate of return to college has stabilized and perhaps reduced. In spite of this concern, the economic case for increasing access to higher education is sturdy. Despite different arguments on college education and access, there has been a continuing trend for the U.S. economy to demand more skill in its personnel. This appears in the pattern of wages in due course, although, there is also further direct proof.
Conclusion
The second part addresses the fundamental question of the need for public policies to enhance access to college education. We expect that a strong public policy to enlarge access needs to be founded in the awareness of economic demand.
Despite different arguments on college education and access, there has been a continuing trend for the U.S. economy to demand more skill in its personnel. Thus, the key point is that increasing access to higher education is an excellent public policy. Such an effort would make logic on social and civic basis, depending with the needs of the U.S. economy.
This paper is significant to high school leavers, who intend to join college, as well as, the government, during policy formulation. Before deciding to go for college education, high school leavers should consider whether the college education will increase their productivity on a job. If not, then such college education can not be rationalized. Similarly, governments must consider the pros and cons of easing access to college education during formulation of education policies.
Works Cited
Glaeser, Edward and Albert Saiz. “The Rise of the Skilled City,” NBER Working Paper number 10191, December, 2003.Print.
Gould Eric. “Rising Wage Inequality, Comparative Advantage, and the Growing Importance of General Skills in the United States,” Journal of Labor Economics 20.1 (2002 January): 105-147.Print.
Marcotte, David, Thomas Bailey, Carey Borkoski, and Greg Kienzl. “The Returns of a Community College Education: Evidence from the National Education Longitudinal Survey.Educational Evaluation and Policy Analysis 27.2 (2005 summer): 157-175. Print.
Toossi Mitra. “Labor Force Projections To 2016: More Workers In Their Golden Years,” Monthly Labor Review (2007 November): 33-52. Print.
