the correlation between education and earnings

8/8/2019 THE CORRELATION BETWEEN EDUCATION AND EARNINGS

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Higher Education 3 (1974) 43-589 Elsevier Scientific Publishing Company, Amsterdam - Printed in the Netherlands

T H E C O R R E L A T I O N B E TW E E N E D U C A T I O N A N D E A R N I N G S :THE EXTERNAL-TEST-NOT-CONTENT HYPOTHESIS (ETNC)

PETER WILESLondon School of Economics and Political Science

Houghton Street, London WC2A 2AE, United Kingdom

AB STRACT

The Human Capital theory, as ordinarily defined, is a "content" theory of theeconomic value of a higher education to its recipient or his employer. Butnon-v ocational higher educati on offers by def inition no such conte nt. So why does ityield a higher income? Various theories are examined :

1) The degree is an external test, vastly expensive to society but very cheap toindividual employers;

2) The degree course forms character, and that is a kind of human capital;3) The degree course exercises the mind, and develops it like a muscle;4) The degree confers social status;5) Insistence on a degree, including now vocational degrees, is a restrictive

practice by many trade unions.People also seek non-vocation al higher education because it is publicly financed.There is a " Rob bi ns ian " supply curve of higher education facilities. This is pro foundlyirrational, but all parties react rationally to it. No evidence conn ectin g degreecertificates with income could distinguish between Human Capital and most of theseother theories. Possible statistical tests are discussed.

One of the most prominent advocates of recruitment by examinationwas Macaulay whose work on the reform of the Indian Civil Service was aforerunner of the Northcote-Trevelyan proposals for the Home CivilService. The lines of Macaulay's answer to the objection that academicexaminations are irrelevant to an administrator's work may be seen fromthe following instructive passage:

It is said, I know, that examin ations in Latin, in Greek and in mathematicsare no tests of what men will prove to be in life. I am perfectly aware thatthey are not inf allible tests; but that they are tests I conf iden tlymaintain... Whether the English system of education be good or bad isnot now the question. Perhaps I may think that too much time is given tothe ancient languages and to the abstract sciences. But what then?

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W hatever be the languages - wh atever be the sciences , w hich i t is , in anyage o r coun t ry , t he f ash ion to t each , t hose who become the g rea t es tproficients in those languages, and those sciences, wil l general ly be thef l o w e r o f y o u t h - t h e m o s t a c u te - t h e m o s t i n d u s tr i o u s - t h e m o s tamb i t ious o f hono u rab le d i s ti nc tions . I f t he P to lemaic sy s t em were t augh ta t Cambr idge , i n s t ead o f t he New ton ian , t he sen io r wrang le r wou ld never -the less be in genera l a super io r m an to t he w oode n spoon . I f i n s t ead o fl e a rn i n g G re e k , w e le a r n e d t h e C h e r o k e e , t h e m a n w h o u n d e r s t o o d t h eC h e r o k e e b e st , w h o m a d e t h e m o s t c o r r e c t a n d m e l o d i ou s C h e r o k e e v e rs e s- w h o c o m p r e h e n d e d m o s t a c c u r a t el y th e e f f e c t o f t h e C h e r o k e e p ar ti c le s- would genera l ly be a super io r ma n to h im w ho was des t i t u t e o f t heseacco mp l ishme nts . I f as t ro logy were taugh t a t our Univers it ies , the you ngman who cas t na t iv i t i es bes t wou ld genera l ly t u rn ou t a super io r man . I fa l c h e m y w e r e t a u g h t , t h e y o u n g m a n w h o s h o w e d m o s t a c t i v i t y i n t h epu rsu i t o f t he ph i lo sopher ' s s tone , wou ld genera l ly t u rn ou t a super io rma n (Thom as Bab ing ton Macau lay on Ind ian educ a t ion : K ei th , 1961 , Vo l I ,p p . 2 5 2 - 3 ) .

1 . I n t r o d u c t i o nO f r e c e n t m o n t h s f l a t t e r in g a t t e n t i o n h a s b e e n p a id t o a f r iv o l o u s

p a s sa g e o f m i n e i n a c o n t r i b u t i o n t o a f l y - b y - n i g h t s y m p o s i u m ( W il es ,1 9 6 9 , p . 1 9 5 ; c f . B l a u g , 1 9 7 1 ) . T h e i d e a h a s e v e n b e e n a p p l i e d t ou n d e r d e v e l o p e d c o u n t r i e s , a n d b e c o m e a p a r t o f t h e t h e o r y o f d e v e lo p -m e n t ( C l in e , 1 9 7 2 ; R a d o , 1 9 7 1 ) . I t h o u g h t a t t h e t im e t h i s c o n t r i b u t i o nw o u l d d o m y a c a d e m i c r e p u t a t i o n l i t t l e g o o d b e c a u s e i t w a s n o t s e ri ou s . In o w f i n d t h a t i t is s e r io u s , s o e n h a n c e s m y r e p u t a t i o n b u t t h r e a t e n s m ye a r n i n g s i n s t e a d . F o r in s a y i n g t h a t d e g r e e s a n d l e a v i n g c e r t i f i c a t e s a r ev a l u e d n o t f o r t h e c o n t e n t o f t h e e d u c a t i o n t h e y c e r t i fy b u t as a c c e p t a b l et i c k e t s o f e m p l o y a b i l i t y i n g o o d jo b s , I t r a n s f e r a g o o d d e a l o f h i g h e re d u c a t i o n o u t o f h u m a n c a p it a l f o r m a t i o n i n to c o n s p i c u o u s c o n s u m p t i o na n d s o c i a l l y i r r a t io n a l c a r e e r i s t c o m p e t i t i o n , a n d l o w e r d r a s t ic a l l y m y o w nm a r g i n a l s o c ia l p r o d u c t . F o r R u s s i a n S o c i a l a n d E c o n o m i c S t u d i e s is aq u i n t e s s e n t i a l l y g e n t l e m a n l y s u b j e c t , o f t h e k i n d t h a t t h e Externa l -Tes t -n o t - C o n t e n t ( E T N C ) a n d s i m i la r h y p o t h e s e s w o u l d d e v a lu e .

E c o n o m i c r e s e a rc h i n t o h i g h e r e d u c a t i o n , i n c i d e n t a l l y , w o u l d n o t b es i m i la r ly d e v a l u e d . I t s e x i s t in g d o c t r i n e s w o u l d b e s h o w n t o b e w r o n g , a n dt h i s w o u l d d e s t r o y p a r t ic u l a r p e o p l e ' s a c a d e m i c r e p u t a t i o n s . B u t m o r ec o r r e c t d o c t r i n e s w o u l d b e , e x h y p o t h e s i , s u b s t i t u t e d , a n d d i f f e r e n tc o n c l u s i o n s f o r p u b l ic e x p e n d i t u r e u r g e d u p o n g o v e r n m e n t s . T h e in s t i-t u t e s a n d c o u r s e s w o u l d c o n t i n u e . I n a n y c a s e o n l y a q u i t e s m a l l p a r t o fa ll h u m a n c a p i t a l w o u l d h a v e b e e n a b o l i s h e d .

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s t a n d a r d , g e t d e g r e e c o u r s e s a s o f r i g h t , l a r g e l y a t t h e t a x p a y e r s ' e x p e n s ea n d w i t h n o l i m i t o f n u m b e r s . S t u d e n t l o a n s , a t f u l l c o s t , w o u l d d r i v el ar g e n u m b e r s i n t o t h e m o r e p r o f i t a b le a l te r n at iv e o f e a r ly w o r k p lu s ates t as in (v) .

( x i) T h e p u b l i c s u p p l y c u r v e o f h i g h e r e d u c a t i o n i s R o b b i n s i a nb e c a u s e o f t h r e e q u i t e e x t r a - e c o n o m i c i d e o l o g i c a l f a c t o r s . T h e s e a r e , i nc h r o n o l o g i c a l o r d e r o f t h e i r a p p e a r a n c e , das Gentlemanideal, i n t e r n a -t i o n a l l y c o m p a r a b l e s ta t is t ic s o f e d u c a t i o n , a n d t h e h u m a n c a p i ta la p p r o a c h i n e c o n o m i c s ( f o r w h i c h I a m t o l d I a m a l so r e s p o n s i b l e - W i le s1 9 5 6 ) .

( x i i ) T h e r e i s a l s o o n e e c o n o m i c e x p l a n a t i o n f o r t h i s c u r i o u s s u p p l yc ur ve . N o n - V o c a t io n a l H i g h er E d u c a t io n ( N V H E ) h a s s u c c ee d e d E m p i reas o u t d o o r r e l ie f f o r t h e u p p e r c l as se s, t e a c h e r s a n d t a u g h t a l ik e . T h i s isp a r ti c u la r ly i m p o r t a n t f o r t h e t a u g h t : a s j u v e n il e e m p l o y m e n t s h r in k s t h ep o o r y o u n g g o o n t h e d o l e w h i le t h e r ic h y o u n g t ak e d e gr ee s. B u t i n o r d e rt o m a k e t h i s t o l e r a b l e t o th e p o o r a s p a r e n t s , t a x p a y e r s a n d v o t e r s , N V H Em u s t b e m a d e f r ee l y a v ai la b le t o t h e i r a b le r c h i l d r e n .

( x ii i) T h e r e is a ls o a n e l e m e n t o f s o c i al p o l i c y : i t is t h o u g h t g o o d t ot u r n t h e m o s t i d e o l o g i c a ll y c o n s c i o u s p r o l e t a r i a n s i n t o g e n t l e m e n . In f a ct ,o f c o u r s e , i t is b a d , s i n ce g e n t l e m e n h a v e a l w a y s b e e n a s r e v o l u t i o n a r y a sa n y o t h e r c la ss , w h i l e b e i n g m u c h b e t t e r a t i t. S o r e v o l u t i o n lo s e s n oq u a n t i t y b u t g a in s q u al it y . ~ Q u a n t i t y is, h o w e v e r , r e d u c e d b y t h e e l e m e n to f o u t d o o r r e l ie f (a b o v e) .

( x iv ) T h u s t h e R o b b i n s i a n s u p p l y c u r v e is i r ra t io n a l , b u t e v e r y b o d ye ls e r e a c ts q u i t e r a t i o n a l l y t o i t: a n a b s o l u t e l y n o r m a l s i t u a t i o n w h e n t h eg o v e r n m e n t i n te r v e n e s in t h e m a r k e t p la c e. M o r e o v e r s u c h a s u p p l y c u rv eis n o t l o g ic a ll y in d i s p e n s a b l e t o t h e h y p o t h e s i s .

( xv ) O n t h e q u e s t i o n o f s u b s e q u e n t c a r ee r a d v a n c e m e n t ( B la u g,1 9 7 1 ) , E T N C m a y b e s t a t e d s t r o n g l y o r w e a k l y . I p r e f e r t h e w e a k v e rs i o n ,w h i c h s a y s t h e c e r t i f i c a t e i s a carte d'entrOe s u b s e q u e n t l y d i s c a r d e d i nf a v o u r o f c o l le a g u e s ' o p i n i o n s , s u p e r i o r s ' r e p o r t s , e t c . ( B e r g, 1 9 7 0 ) , b u tt h a t t h e b a s ic c o n s i l i e n c e o f c e r t i f ic a t e w i t h s u b s e q u e n t o p i n i o n s r e s ts o nt h e r a t io n a l i t y o f t h e p r o c e d u r e s a n d p e r s o n s g e n e r a ti n g b o t h . H o w e v e rt h e s t r o n g v e r s io n i s a t t ra c t iv e : c o l le a g u e s a n d s u p e r i o r s m o d i f y t h e i ro p i n i o n s o f o n e a c c o r d i n g t o o n e ' s e d u c a t i o n a l c e r t if i c a te , a n d t h i sg e n e r a t e s a v i c i o u s c i r c l e . P e o p l e a c q u i r e c e r t i f i c a t e s n o w , a n d a r e g i v e ng o o d j o b s n o w , b e c a u s e i t is k n o w n t h a t h i g h o p i n i o n s w il l b e h e l d o f

2 T h e c u r r e n t w a v e o f y o u t h f u l r e v o l u t i o n is n o e x c e p t i o n t o t hi s. B u t t h e N e w L e f tw a s b o r n l o n g a f t e r t h e R o b b i n s i a n s u p p l y c u r v e o f N V H E h a d b e c o m e p a r t o f t h en a t i o n a l c o n s e n s u s . I t is n o d o u b t i ts a d v e n t t h a t h a s e n c o u r a g e d t h e a u t h o r t o t h i n ka g a in a b o u t t h i s w h o l e c o m p l e x o f p r o b l e m s .

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t h e m i n t w e n t y y e a r s t im e o n t h e b a si s o f t h e s e c er t if ic a t es . T h e r e f o r e t h ec e r t i f i c a t e s h a v e o n l y t h is r e l a t i o n t o c u r r e n t m e r i t , t h a t c l e v e r p e o p l ec o m p e t e f o r t h e m . T h i s o f c o u r s e is t h e e s s e n c e o f E T N C .

( x v i ) T r a i n i n g o n t h e j o b c a n b e s i m i la r ly t r e a t e d w e a k l y o r s t r o n g l y .S u c h t r a in i n g i s o f t e n a p r e l u d e t o p r o m o t i o n , a n d t h e r e f o r e t o fu r t h e rt r ai n in g o f t h e s a m e k i n d p r i o r t o f u r t h e r p r o m o t i o n . S o i t is a l l o c a t e d tot h o s e c o n s i d e r e d m o s t m e r i t o r io u s , a n d a t t h e b e g i n n i n g o f o n e ' s c a r e e rt h a t m e a n s t h o s e w i t h th e b e s t e d u c a t i o n a l c e r t if i ca t e s. N o w t h e w e a kv e r s i o n o f E T N C is th a t r e s u lt s in b o t h k i n d s o f t ra i n in g g o b y m e r i t , a n dt h a t is w h y b o t h a r e p o s i t iv e l y c o r r e l a te d w i t h in c o m e . T h e s t r o n g v e r s io nis t h a t t h e r e s u l ts o f t r a in i n g c o u r s e s a r e b a s e d o n p r i o r e d u c a t i o n a lc e r ti f ic a t e s, w h i c h o n l y g u a r a n t e e m e r i t b e c a u s e t h e y h av e b e e n c o m p e t e df o r , a s a b o v e .

" H u m a n c a p i ta l ," o n t h e o t h e r h an d , is a n a l m o s t p u re " c o n t e n th y p o t h e s i s " : w h a t w e l e ar n a t s c h o o l is k n o w l e d g e u s e f u l i n p r o d u c t i o n .W e s e e l a te r (i n s ec s. 5 - 7 ) t o w h a t e x t e n t t h i s c o n c e n t r a t i o n o n c o n t e n tc a n b e m o d i f i e d s o as t o s av e h u m a n c a p it al . S u f f i c e i t f o r t h e m o m e n tt h a t N V H E i s by de f in i t i on u s e le s s i n p r o d u c t i o n . T h e r e f o r e , h u m a nc a p i t a l c o u l d n o t i n c l u d e i t u n l e s s o n e o r o t h e r t e r m w e r e r e d e f i n e d .

3 . E d u c a t io n a n d E m p l o y m e n tE T N C is a d i f f i c u l t t h e s is t o r e f u t e , s i n c e i t e x p l a i n s j u s t a s w e l l a s

h u m a n c a p i ta l t h e c o r r e la t i o n o f i n c o m e w i t h e d u c a t i o n . B u t w h a t isd i f f i c u l t t o r e f u t e is o f t e n e q u a l l y d i f f i c u l t t o es t a b li s h . G r i l i c h e s ' w o r kh a s b e e n r e c o m m e n d e d t o m e . B u t n o n e o f i t e n a b le s u s t o d i st in g u is ht h e m - n o r i s i t f ai r t o a s k t h i s o f h i m , s i n ce h e d o e s n o t c o n s i d e r t h em a t t e r d i r e c t l y .

T h u s ( G r i l ic h e s a n d M a s o n , 1 9 7 0 , p . 1 3 ) i t is i n t e r e s t in g t h a t t h ec o - e f f i c i e n t o f c u r r e n t i n c o m e o n e d u c a t i o n a f t e r m i l i ta r y s e rv i ce in th eU . S .A . i s 0 . 0 4 5 0 , a l l o w i n g f o r a n I .Q . p r o x y , 3 a g e, p a r e n t a l s t a t u s , ra c e ,e d u c a t i o n b e f o r e m i l i t a r y s e r v i c e a n d r e g i o n a l o r ig i n, w h i l e i t is n o t m u c hh i g h e r ( 0 . 0 5 1 3 ) i f w e e x c l u d e a ll t h e s e i n f l u e n c e s e x c e p t r a ce , e d u c a t i o nb e f o r e m i l i ta r y s e rv i ce a n d a ge . T h i s p r o b a b l y d o e s s h o w t h a t e d u c a t i o n i si m p o r t a n t l y c o r r e la t e d w i t h c u r r e n t i n c o m e . B u t o f c o u r s e i t d o e s n ' t s h o ww h y t h i s c o r r e l a t i o n h o l d s .

3 A very bad one, the A rm ed Fo rces Qualification Test, adm inistered at eighteen andso incorporating vast influences other than pure intell igence (Gril iches and Mason,1970, p. 16).

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A g a i n i n G r i li c h e s ( 1 9 7 0 , p . 8 0 ) w e r e a d : " E v i d e n c e (i n s o m e c as u a ls e ns e ) h a s y e t t o b e p r e s e n t e d t h a t " e d u c a t i o n " e x p l a in s p r o d u c t i v i t yd i f f e r e n t i a ls a n d t h a t , m o r e o v e r , t h e p a r t i c u l a r f o r m o f t h is v a r i ab l es u g g e s t e d a b o v e d o e s i t b e s t . T h e r e i s, o f c o u r s e , a g r e a t d e a l o f e v i d e n c et h a t d i f f e r e n c e s in s c h o o l i n g a re a m a j o r d e t e r m i n a n t o f d i f f e r e n c e s i nw a g e s a n d i n c o m e , e v e n h o l d i n g m a n y o t h e r th i n g s c o n s t a n t . A l s o , r a t i o n -a l b e h a v i o u r o n t h e p a r t o f e m p l o y e r s w o u l d l e a d to t h e a l l o c a t io n o f t h el a b o u r f o r c e in s u c h a w a y t h a t t h e v a l u e o f t h e m a r g i n a l p r o d u c t o f t h ed i f f e r e n t t y p e s o f l a b o u r w i ll b e r o u g h l y p r o p o r t i o n a l t o t h e i r r e la t iv ew a g e s . " B u t m y t h es is a l s o p o s t u l a t e s r a t i o n a l b e h a v i o u r O n t h e p a r t o f e m -p l o y e r s , s in c e e d u c a t i o n a l t e s t s a r e o n t h e w h o l e g o o d o n e s a n d c or -r e c t l y p r e d i c t p r o d u c t i v i t y . M i c r o - r a t i o n a l i t y d o e s n o t e s t a b l i s h m a c r o -r a t i o n a l i t y , a n d I o n l y d i s p u t e t h e l a t t e r .

L a y a r d ( 1 9 7 1 ) a r gu e s t h a t G r i l i c he s ( 1 9 6 4 ) s o m e h o w g e ts a r o u n dt h is d i f f i c u l t y , b e c a u s e t h e e d u c a t i o n a l c o - e f f i c i e n t is i n t h a t c a s e d e r i v e df r o m a re g i o n a l c r o s s - se c t io n , n o t a t e m p o r a r y s er ie s . F o r o f c o u r s e m yh y p o t h e s i s c o u l d i n o n e v a r i a t io n h a v e a t e m p o r a l e l e m e n t : t h e t e s t re s u l tr e p l a c e s t h e u t i l i t y o f t h e a c t u a l c o n t e n t b y a v i c i o u s c i rc l e a c t i n g o v e rt im e . B u t t h e m e r e f a c t t h a t c e r t a i n d a t a s h o w i n g a p o s i t i v e c o r r e l a t i o n o fe d u c a t i o n w i t h i n c o m e a r e s i m u l t a n e o u s c a n i n n o w a y r e f u t e a h y p o t h e s i st h a t s a y s t h a t e d u c a t i o n t e s ts c o r r e c t l y p r e d i c t p r o d u c t i v i t y .

T A B L E IS i tua t ion I(pr incipal ly subsid ized un iver-s i ty , some pr ivate decent ral ized ,tes t ing)un iver s i ty o theren t rance cand ida t es

Si tuat ion I I

( o n e n a t i o n w i d epr ivate tes t )

i ) Cos t o f educa t ion , s 3000 0i i) Cost o f in terv iewing , s 15 c 30 cii i) Nu mb er o f peop le on sho r t l is t 4 20 biv) To ta l p r iva t e co s t o f t es t, s 60 600

20a15 c4560 e

a Th is is t he cos t o f the na t ionwide t es t . I t i s l es s t han s because there a re econ o -mies o f scale , and n o costs o f t ravel o r subsis tence.b Th e sho r t l i st is longer because there a re f a r f ewer chances o f f i nd ing su i tab l e peop le .c The in t e rv i ewing o f p re - t es t ed peop le i s mu ch sho r t e r .d Inc lud ing s 10 t ravel and subsis tence.e Inc lud ing the cos t o f admin i s t e r ing the na t ion -wide t es t t o 20 cand ida t es , where 20i s t he nu mb er on the sh o r t l is t i n the secon d co lumn .

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A g a i n L a y a r d a r g u e s ( in p r i v a te c o r r e s p o n d e n c e ) t h a t : " O n e w o u l de x p e c t t h e s u p p l y p r ic e o f t h e 2 1 - y e ar - ol d w i t h ' A ' l e ve ls w h o h asf o r e g o n e n o i n c o m e f r o m a ge 1 8 - 2 1 t o b e m u c h l o w e r t h a n t h a t o f t h e2 1 - y e a r- o ld g r a d u a t e . S o w h y a r e n ' t e m p l o y e r s w i l li n g t o s p e n d s t of i n d t h e g o o d ' A ' l e ve l p e o p l e , t h u s a b o l i s h i n g a n y f i n a n c i a l i n c e n t i v e f o ri n d i v id u a l s t o g r a d u a t e ? " B u t 2 1 - y e a r- o ld s w i t h o u t d e g r e e s a re b o u n d t ob e i n f e r i o r a s a g r o u p t o t h o s e w i t h d e g re e s , a n d e m p l o y e r s d o o f c o u r s et e st t h e m , f o r w h a t t h a t is w o r t h . O n l y t h e y m u s t t e s t fa r m o r e o f t h e mi n o r d e r t o o b t a i n o n e g o o d o n e , a s T a b l e I sh o w s .

T h e r e s u l t i s t h a t n o n - u n i v e r s i t y c a n d i d a t e s a r e e i t h e r n o t h i r e d a t a l l ,o r p u t i n t o l o w e r - p a i d p o s i ti o n s . I t i s s i m p l y t o o e x p e n s i ve t o l e t t h e mc o m p e t e f ai rl y. M o r e o v e r e m p l o y e r s w o u l d e v en fi n d i t m o r e e x p e n s i v e t or u n a s i n g l e p r i v a t e s c h e m e t h a n t o c o n c e n t r a t e o n g r a d u a t e s ; s o t h e r e i sn o p r i v a te i n c e n t i v e t o s t a r t u p s u c h a te s t. B u t i t w o u l d b e v er y c h e a p f o rt h e s t a te t o s u b s id i ze a n a t i o n w i d e t e s t : a n d t h e t r a n s fe r e n c e o f o n l y av e r y f e w p e o p l e o u t o f u n iv e r s it ie s in t o w o r k u n t i l a g e 2 1 w o u l d m a k e i ta c t u a l l y p r o f i t a b l e .

N e x t , w h y d o n ' t e m p l o y e r s t e s t 1 8 -y e a r- o ld s i n a r i g o r o u s m a n n e r ,p r o m i s i n g t h e m g r a d u a t e - t y p e c ar ee rs ? B u t a b le y o u n g s t e r s t a k e n o n a t 1 8a n d l a u n c h e d i n t o s u c h c a r e e r s w o u l d n o t f e t c h l o w e r s a l a r i e s a t 2 1 t h a ng r a d u a t e s o f e q u a l a b il it y , s in c e p r i ce s d e p e n d o n d e m a n d ( c o n s t a n t e xh y p o t h e s i ) a n d t h e q u a n t i t y s u p p l ie d , n o t i t s " s u n k " c o s ts . B e s i de s m u c ho f t h e s e c o s ts is c o n s u m p t i o n - t y p e u t il it ie s a l re a d y e n j o y e d a n d w i t h o u ta n y c l ai m a t a ll t o f u r t h e r c o n s i d e r a t i o n . T h i r d l y , s o m e e m p l o y e r sa c c u s t o m e d t o r e c r u i t i n g m a n a g e r i a l p e r s o n n e l a t 1 8 ( t h e a r m e d f o r c e s ,t h e b a n k s ) d o c o n t i n u e t o s t a n d o u t a g a i n st t h e t r e n d - b u t o n l y b yp r o m i s i n g d a y r e l ea s e a n d t h e o p p o r t u n i t y t o g e t a d e g re e ! T h e " f i n a n c i a li n c e n t i v e f o r i n d i v i d u a l s t o g r a d u a t e " r e m a i n s , i n t h a t t h e s e r e c r u i t s w i s ht o b e o c c u p a t i o n a l l y m o b i l e , in a w o r l d c o n f o r m i n g to E T N C . F o u r t h l y ,th e t e s t a t 1 8 is as ex p en s iv e a s i t is a t 2 1 , a s i l l u s t r a t e d ab o v e .

4. Subject-M atter o f DegreesH o w , t h e n , c a n E T N C b e c h e c k e d a g a in s t " h u m a n c a p i t a l" ? I t h i n k ,

b y b r e a k i n g d e g r ee s a n d c e r t if i c a te s d o w n a c c o r d i n g t o s u b j e c t . It iso b v i o u s t h a t a f i r s t c l a s s d e g r e e i n S a n s k r i t i m p l i e s m o r e i n t e l l i g e n c e a n dl es s u s e f u l k n o w l e d g e t h a n a t h i r d c la ss d e g r e e i n E c o n o m i c s . B u t i t is,a la s, a ls o o b v i o u s t h a t f ir st s i n S a n s k r i t a re le ss m o t i v a t e d t o m a k e m o n e yt h a n t h i r d s i n E c o n o m i c s . S o o u r f i r s t s t a g e i s t o a n a l y s e t h e i n c o m e s o ft h o s e n o w e m p l o y e d i n b u s i n e s s o n l y (o r S a n s k r i t s t u d i e s o n l y ) a c c o r d i n gt o t h e s u b j e c t - m a t t e r o f t h e i r d e g r ee . T h i s p r o c e d u r e c o n t r o l s to s o m e

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extent the motivation factor. The higher the correlation of income withdegree-class (or quality of school/univers ity plus class), and the lower itscorrelation with relevance of subject-matter, the more true is ETNC andthe less true is human capital.

It seems that detailed informat ion of the type required is available inthe 1970 British Census, and from University Appointments Boards. Butsuch bodies must respect privacy, and would probably refuse access todata on individuals. So a research project on these lines would probablymean a separate survey, and would be very expensive. I make no apology,then, for publishing an article the principal point of which is toreco mmend research, not present it.

Secondly, we could contrast degrees with ability in more or less per-fect labour markets, standardizing income by age. Thus accountantsand solicitors enter their careers with graduate and with non-graduatetraining. ETNC would lead us to suppose that graduates would startout at higher salaries, but the high turnover among firms would even-tually sort people out by ability instead. So the incomes of the middle-aged would be arranged more by IQ than by formal qualification -whereas in more structured careers, we have seen reason to suppose,training on the job accrues mostly to those with the better degrees andcertificates, so that the initial income handicap is seldom overcome.

See also, for a third type of data, this time actual ly available, theappendix.

5 . T h e C h a r a c t e r - F o r m a t i o n - N o t - C o n t e n t H y p o t h e s is :Even so it can be argued that we are taking an over-simple view, in

that length of education, no matt er in what subject and little matte r withwhat results, is itself of positive marginal productivity, because of theCharacter-Formation-Not-Content Hypothesis (CFNC). Thus to be 21 andhave 15 years of education is to be more (a)mature, (b)docil e,(c) persistent, and (d) self-confident than to be 21 and have 10 years ofeducation plus 5 of work. From casual observation I would say that(a) was the opposite of the tru th and (c) extremely doubtful. Point(b) however is important. What employers need is intelligent conformism,or great independence and originality within a narrow range. It may justbe that prolonged education is on the whole more productive of thisadmirable qual ity than juvenile labour - and it also may not. But it is animportant quality, and its development might appropriately be calledhuman capital accumulation. Point (d) however is strongly allied to statusquestions and is dealt with in section 7 below.

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6 . The Exerc i se -Not-Content -Hypothes i sI f w e r u le o u t c h a r a c t e r - f o r m a t i o n f r o m h u m a n c a p it a l w e c o m e

c l o s e t o r u l in g o u t s h e e r l e n g t h o f e d u c a t i o n a s a fa c t o r , a n d pro tan to o u rt h e o r ie s a p p r o x i m a t e t o E T N C . B u t n o t q u i te : s h e e r s c h o o li n g u n d o u b t -e d l y d e v e l o p s g e n e r a l i n t e l l i g e n c e , j u s t a s s h e e r r e p e t i t i v e u n s k i l l e d j u v e n i l el a b o u r d u l l s it . P e r h a p s , t h e n t h i s is t h e r a t i o n a l r e a s o n f o r N V H E : i t i sm e n t a l g y m n a s t i c s , a n d t h e b r a i n is l ik e a m u s c l e.

C e r t a i n l y t h i s is a v i e w o f v e r y l o n g s t a n d i n g . I t m a y b e c a l le d t h eExercise-not-Content Hypothesis ( E X N C ) . I t is c e r t a i n l y m o r e f l a t t e r i n gt o t h e t e a c h e r e n g a g e d i n N V H E . I t a ls o , l ik e C F N C , s av e s h u m a n c a p i ta l .I t m a y , t h i rd l y , b e tr u e. T h a t t h e a c t u al c o n t e n t o f N V H E s h o u l d b e o fv a lu e i n e m p l o y m e n t ( th e " C o n t e n t H y p o t h e s i s " ) r em a i n s e x c lu d e d , as w es a w , b y d e f i n i t i o n .

7 . The Status -Not-Content Hypothes i sA n o t h e r p o s s i b i l i t y i s t h a t t h e Status-Not-Content-Hypothesis

( S N C ) d e g r e e h a s a l w a y s b e e n a s t at u s s y m b o l , t h o u g h i n s o m e w a l k s o fl i fe i t u s e d t o r a n k s e c o n d t o a p u b l i c s c h o o l t i e: t h e C i t y , t h e F o r c e s -p r e c is e l y t h o s e s e c t o r s w h e r e e v e n t o d a y ( s e c t io n 3 ) a s e r io u s a t t e m p t iss til l m a d e t o r e c r u i t s c h o o l -l e a v er s f o r m a n a g e r i a l p o s i ti o n s ( t h o u g h n ol o n g e r o n l y f r o m t h e p u b l i c s c h o o l s ). I t is n o t , I t h i n k , t h e f a c t t h a tE n g l a n d h a s a n a r i s t o c r a c y t h a t m a k e s h e r m o r e s t at u s - c o n s c i o u s th a no t h e r n a t i o n s ( i n c l u d i n g h e r o w n C e l t ic F r i n g e ) . I n d e e d as a r i st o c r ac i e s g ot h e E n g l is h o n e i s n o t o r i o u s f o r it s c o m p a r a t i v e o p e n n e s s ; a n d it s m a l ey o u n g h a v e t r a d i t i o n a l l y a c c o r d e d h i g h v a lu e , t h o u g h n o t s o ci al s t a tu s , t od e g r e e s - o f a so r t. W h a t u s e d t o c o u n t w a s t h e a l t o g e t h e r i r r a ti o n a lp r e f e r e n c e o f t h e E n g l i s h m i d d l e c l a s s f o r p a r t i c u l a r " p u b l i c " a n dg r a m m a r sc h o ol s. B u t t h e y a re n o w c o m i n g t o s ee th e s e a s m e r e l y o n ek i n d o f s t e p p i n g - s t o n e t o t h e n e w s t a t u s s y m b o l , a d e g r e e. T h e E n g l i s hm i d d l e c la ss a re a d o p t i n g t h e s a m e f e t is h a t t h e r e st o f h u m a n i t y .

A t p a r ti e s, y o u c u t m o r e ic e w i t h a d e g r e e t h a n a s a la ry . A l s o m e r e l yf i n a n c i a l d e f i c i e n c i e s a r e e a s i e r t o c o n c e a l ; i t is p o l i t e t o a s k a b o u t y o u rd e g r e e, r u d e t o a s k a b o u t y o u r s a la r y. E v e r y o n e k n o w s t h e m a r k e t is e v e nm o r e o f a l o t t e r y t h a n t h e e x a m i n a t i o n h a ll : t h e d e g re e , n o w t h a t i t iss u p p l i e d o n R o b b i n s i a n p r i n c ip l e s , is t h e t r u e r t e s t o f w o r t h . B e s id e s , y o um i g h t e a s il y h a v e p o l it i ca l o r c o n s c i e n t i o u s o b j e c t i o n s t o d o i n g t h e k i n d o fw o r k t h a t b r in g s i n a l a rg e sa la ry , b u t y o u h a v e to b e f a r o u t i n d e e d t on u r t u r e i d e o l o g ic a l d o u b t s a b o u t e d u c a t i o n a l s u cc e ss . M o r e o r l es s a s s u re do f a n i n c o m e , t h e m i d d l e c la ss es h a v e s h i f t e d t h e f o c u s o f t h e i r s o ci alc o m p e t i t i o n . W h e n w e s a y t h a t N V H E , i n d e e d all H E , is a c o n s u m p t i o n

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g o o d , w e m e a n n o t o n l y t h a t i t is p le a s a n t , a s t h in g s g o i n t h i s v a le o ft e a r s , t o a c q u i r e ( s e c t i o n 2 / i x ) ; w e m e a n t h a t y o u n g m e n l i k e t o i m p r e s sp r e t t y g irls. A n e c o n o m i s t n e e d s t o b e a n t i - s o c io l o g i c a l i n d e e d t o d e n yt h a t .

T h i s m u c h e c o n o m i c l o g ic , h o w e v e r , i n h e r e s i n SN C : s t a t u s gi ve s am a n s e l f - c o n f id e n c e , a n d e n a b l e s h i m t o l e a d o t h e r s . T h e r e f o r e j u n i o rm a n a g e r s s h o u l d h a v e d e g r ee s a n d p r o f e s s o r s s h o u l d h a v e d o c t o r a t e s . 4 B u tt h i s is l o g i c a l i n t e r m s o f p r i v a t e , n o t s o c i a l, p r o f i t . O b v i o u s l y i f f e w e rp e o p l e h a d d e g r e e s o f a ll s o r ts , j u n i o r m a n a g e r s a n d p r o f e s s o r s w o u l d h a v ej u s t a s m u c h s t a tu s as t h e y d o n o w , si n ce s t a t u s a n d s e l f - c o n f i d e n c e a rep u r e l y r e l a ti v e . H o w e v e r , s i n c e t h e p r o f e s s i o n a l c la s se s ar e s o m i g r a t o r yn o w a d a y s t h e r e w o u l d h a v e to b e i n t e r n a t i o n a l a g r e e m e n t .

8. Th e Restrict ive-Practice-Not-Content H yp oth esisT h e n t h e r e i s t h e Restrictive-Practice-Not-Content h y p o t h e s i s

( R P N C ) . T h e c o m p e t i t i v e m a r k e t is c y n i ca l a n d u n s y m p a t h e t i c . T h e r e isa lw a ys s o m e c u r m u d g e o n w h o m a k e s m o r e m o n e y b y n o t b e in g tr e n d y ,a n d f o r c e s t h e r e s t o f u s t o f o l l o w h i m , k i c k i n g a n d s c r e a m i n g , b a c k i n t ot h e n i n e t e e n t h c e n t u ry . B u t p u b l ic m o n o p s o n i s t s a n d t r a d e u n i o nm o n o p o l i s t s o f l a b o u r c a n d e f y c y n i c i s m a n d t h e m a r k e t , p r o v i d e d th a tt h e y c o l la b o r a te . A n d i n t h e s e m a t t e r s , w h y s h o u l d t h e y n o t c o l la b o r a te ?T h e t r a d e u n i o n i s t ( l e t u s s a y t h e B r i t is h M e d ic a l A s s o c i a t i o n o r N a t i o n a lU n i o n o f T e a c h e r s n e g o t i a t o r ) c a n d r e s s u p h i s w a g e - c la i m a s a s u p e r i o rq u a l i fi c a ti o n f o r t h e p r o t e c t i o n o f t h e p u b l ic , j u s t i f y in g a t o n c e h i g h e r p a ya n d l o w e r n u m b e r s . T o b e s ur e, th e o l d e r m e m b e r s o f h is u n i o n m a ys u f f e r ( R i c h a r d s o n , 1 9 7 1, C h a p t e r 2) i f t h e b e t t e r q u a li f ie d n e w e n t r a n t s ,d e s p i t e th e i r s m a l le r n u m b e r s , c o m p e t e b u s in e s s o r j o b s a w a y f r o m t h e m .B u t t h i s is n o t a l ik e l y p r o p o s i t i o n , si n c e e v e r y o n e is s u b c o n s c i o u s l y a w a r et h a t t h e n e w q u a l i f i c a t i o n is b o g u s . M o r e o v e r , e x i s t in g m e m b e r s o f t h eu n i o n a r e o l d e r, a n d w i ll n e v e r a ll o w i t to p u t f o r w a r d a c l a im t h a ta c t u a ll y u p s e t s th e a g e / p r o m o t i o n s tr u c t u r e .

T h e p u b l ic m o n o p s o n i s t is n o t p a y i n g o u t o f h is o w n p o c k e t . H en e e d s a s e t t l e m e n t t h a t l o o k s g o o d t o h is su p e r io r s a n d t h e t a x p a y e r - c u m -v o t e r , b e c a u s e t h a t is w h a t w il l g e t h i m p r o m o t i o n . H e h a s , t h e r e f o r e ,e v e r y p o s s i b l e r e a s o n t o g r a s p a t s t r a w s , a n d R P N C i s a m o s t s u b s t a n t i a ls tr a w . I f h e y i e ld s , h e c an u s e h u m a n - c a p i t a l - t y p e a r g u m e n t s t o c o n v i n c eh is s u p e r i o r s o v e r t l y , w h i l e c o v e r t l y s u g g e s t in g t o t h e m , o n t h e li n e s o f4 T h e w r i t e r h a s n o d o c t o r a t e , b u t i s a p r o f e s s o r . H e l e av e s i t t o t h e r e a d e r t o i n t e r p r e tt h is c i r c u m s t a n c e .

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S N C , h o w w i se t h e y h a v e b e c o m e to b e e m p l o y i n g su c h cl ev e r y o u n gp e o p l e .

T h e v a l id i t y o f R P N C m a y b e t a k e n a s f la t ly p r o v e n b y t h e h i g h e re d u c a t i o n a l q u a l if i c at io n s d e m a n d e d b y p u b l i c e m p l o y e r s w h e r e v e r t h e yc o m p e t e w i t h p r i v a t e o n e s . I t a p p l i e s a ls o , as th e B r i t is h M e d i c a lA s s o c i a t io n h a s a m p l y d e m o n s t r a t e d , to v o c a t io n a l e d u c a t i o n . I n d e e d t h isi s i t s p r in c ip a l f i e ld .

9 . C o n c l u s i o n sS u m m i n g u p , I i n c li n e p e r s o n a ll y t o a m i x t u r e o f S N C , E X N C ,

R P N C , E T N C a n d C F N C , i n t h a t o r d e r o f i m p o r t a n c e . O r t h o d o x h u m a nc a p i ta l c o m e s n o w h e r e a t a ll i n N V H E , b u t s h o u l d , a ll c y n i c i s m t o th ec o n t r a r y , r a n k f i rs t i n v o c a t i o n a l t ra i n in g . I t f o ll o w s t h a t t h e e l e m e n t o fm e r e s o c i al ly i r r a t i o n a l o v e r - q u a l i f i c a ti o n is t o o h i g h , a n d t h e v o l u m e o fh i g h e r e d u c a t i o n , e s p ec i al ly N V H E , s h o u l d b e r e d u c e d . B u t o f c o u r s eN V H E h a s a m u l t ip l i e r ef f e ct , l ik e o t h e r c o n s p i c u o u s c o n s u m p t i o n , a n d i td o e s k e e p t h e u p p e r c la ss y o u n g o f f t h e s t re e ts (2 .x ii ), w h e r e t h e y w o u l db e d r e a d f u l ly t r o u b l e s o m e ( 2 .x ii i) . S o w i t h u n e m p l o y m e n t a t 4 % t h e ti m eis n o t r i p e t o p u t t h e s e d o c t r i n e s i n t o e v e n p a rt i al e f f e c t .

T h e d o w n g r a d i n g o f th e h u m a n c ap i t al t h e o r y d o e s n o t h i n g tos u p p o r t C h r i s t o p h e r J e n c k s ' ( 1 9 7 2 ) v ie w t h a t t h e r e d i s t r i b u t i o n o fe d u c a t i o n a l r e s o u r c es f r o m r i ch t o p o o r c h i l d re n w i ll n o t r e d i st r ib u t ei n c o m e b e t w e e n t h e m l a te r in li fe . F o r n o n e o f o u r h y p o t h e s e s s ay s t h a tm o r e e d u c a t i o n w i l l n o t b r i n g m o r e i n c o m e . B e s i d e s , J e n c k s ' h y p o t h e s i s ,i f t r u e a t a ll, r e f er s t o p r i m a r y a n d s e c o n d a r y e d u c a t i o n . W h e n h e c o m e st o h i g h e r e d u c a t i o n h e f a i l s t o s t a n d a r d i z e h i s s t a t i s t i c s b y a g e , a n d s o -d e a li n g as h e d o e s w i t h a g r o w i n g e c o n o m y - o v e r w e i g h ts t h e c o m p a r a -t iv e ly u n d e r p a i d y o u n g g r a d u a te s , t h u s u n d e r s t a t i n g t h e g r a d u a t e l if e-cyc l e .W h a t t h is p a p e r r e al ly d o e s is t o r e s cu e t h e e c o n o m i c s o f e d u c a t i o nf r o m C h i ca g o : f r o m t h e p r e s u m p t i o n s o f r a ti o n a li ty a n d p e r f ec t c o m p e t i-t i o n , n a y e v e n o f s oc i al j u s t i c e in a m a r k e t . T h e r e i s n o t h i n g w r o n g w i t ha p p l y i n g e c o n o m i c a n al y si s to e d u c a t i o n ; b u t t h e r e i s m u c h w r o n g w i t h ap a r t i c u l a r s o r t o f n a i'v e t&

AcknowledgementI o w e a g r e a t d e b t t o t h e c r i ti c is m s o f R i c h a r d L a y a r d .

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A p p e n d i xTyp es of E vidence that Might Distinguish

Between the HypothesesW e s u g g e s t e d in s e c t i o n 4 a c o r r e l a t i o n o f d e g re e -c la s s, d e g r e e

c o n t e n t , i n c o m e a n d r e la t i o n o f o c c u p a t i o n t o d eg r ee c o n t e n t . A n o t h e rp i ec e o f e v i d e n c e is w h a t h a p p e n s w h e n a s c h o o l o r a s u b j e c t is u p g r a d e df r o m d i p l o m a - t o d e g re e -l ev e l. T h e O t t o S u h r I n s t i t u t e o f P o l it ic a l S c ie n c ei n W e s t B e r li n , d e g r a d e d b y t h e N az is , w a s t o t a l l y r e f o u n d e d in 1 9 4 9( H a r t u n g e t a l., 1 9 7 0 , p p . 3 9 - 4 4 ) . P o l i ti c a l s c ie n c e , h i t h e r t o u n r e c o g n i s e di n G e r m a n u n i v e r s it ie s , h a d s p e c ia l e m o t i o n a l s ig n i f ic a n c e i n t h e F R G ,s i n c e i t w a s a n e w d e m o c r a t i c s u b s t i t u t e f o r l a w i n t h e p r e p a r a t i o n o fp u b l i c s e r v a n t s : i t w a s t o s t r i k e a t t h e r o o t s o f a n a u t h o r i t a r i a n t r a d i t i o nm u c h o l d e r t h a n t h e N a z i s . Pol i to log ie w a s t o b e t h e n e w s ci e n ce o fd e m o c r a c y , a n d t h e O t t o S u h r I n s t i tu t e it s h e a d q u a r t e r s . T h e i n s t i t u t eb e g a n a s a n a d u l t r e - e d u c a t i o n c e n t r e b u t q u i c k l y t u r n e d i n t o a r e g u la rh i g h e r s c h o o l g r a n t i n g a d i p l o m a , a n d e n d e d g i v in g d e g r e e s i n s i d e t h e F r e eU n i v e r s i ty o f B e rl in . O u r f i g u r e ( H a r t u n g e t a l., 1 9 7 0 , p . 7 0 ) p u r p o r t s t os h o w t h e e f f ec t o f t h is a c a d e m i c p r o m o t i o n o n t h e i n c o m e s o f itsa l u m n i , s I n t h e l a t e s i x t ie s t h e i n s t i t u t e w as t h o r o u g h l y i n f i l t r a t e d b y t h eN e w L e f t , a n d a s t h i s is w r i t t e n i t h as b e e n c l o s e d b e c a u s e o f d i s o r d e r. I t i sh i g h ly im p r o b a b l e t h a t t h is a f fe c t e d a n y a l u m n u s ' in c o m e in 1 9 6 8.

T h e n u m b e r s o f p e o p l e i n e a c h t w o - y e a r g r o u p r an g e f r o m 4 0 i n t h ee a r l y f i f ti e s t o 1 0 0 i n t h e l a t e s ix t i e s ( p . 1 95 ') . N o n - r e s p o n s e w a s 2 8 % , b u tis n o t t h o u g h t t o o v e r - r e p r e se n t s u cc e ss o r f a il u re ( p p . 5 3 - 6 ) . T h e a u t h o r st h e m s e l v e s i n t e r p r e t t h e i r f a s c i n a t in g f ig u r e a s f o l l o w s ( p . 6 9 ) . T h e k i n k i n1 9 5 7 / 8 o c c u r r e d b e c a u s e w i t h " t h e f o r m a l u l t i m a t e r e c o g n i t i o n o f th es u b j e c t a s a n a c a d e m i c d i s c i p l i n e t h e n e w g r a d u a t e s u p g r a d e d t h e i rv a l u a t i o n o f t h e m s e l v e s . " T h i s is b e c a u s e o f t h e i r t h e o r y t h a t s u p p l y i n t h eg r a d u a t e m a r k e t d e t e r m i n e s d e m a n d . W e h a v e n o t sp a c e h e r e to d i sc u sss u c h a t h e o r y : w e n o t e o n l y t h a t it is e q u a l ly c o m p a t i b l e w i t h " h u m a nc a p i t a l" a n d a n y o f o u r . . . N C t h eo r ie s . A n y w a y , o n t h is b a si s t h e ye x t r a p o l a t e t h e d o t t e d l i n e s a a n d b , t o r e p r e s e n t t h e t o t a l c a r e e r g a ina c c o m p a n y i n g ( n o t e t h e n e u t r a l w o r d ) a c a d e m i c r e c o g n it io n .

T h e s u p e rf ic ia l i n t e r p r e t a t i o n ( w h i c h is al so m i n e ) w o u l d t h e n b et h a t f r o m 1 9 5 9 / 6 0 t o 1 9 6 1 / 2 w e g e t o n e n e w c a re e r c u r ve , a n d t h a t in1 9 6 3 / 4 w e m o v e o n t o a t h i r d , w i t h t h e f i r s t r e l e a s e o f f u l l g r a d u a t e s o ft h e u n i v e r s it y . T h i s is i n d i c a te d b y m y d o t t e d l in e c. T h e a u t h o r s ,s I a m i n d e b t e d t o M r. D a v id W e b s t e r o f t h e H i g h e r E d u c a t i o n R e s e a r c h U n i t at t h eL o n d o n S c h o o l o f E c o n o m i c s f o r d r aw i n g m y a t t e n t i o n t o th i s f ig u re , a n d f o r th e id e ao f i n t e r p r e t i n g i t i n t h is m a n n e r .

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Otto Suhri g 1. C a r e e rs o f t h e a l u m n i o f t h e I n s t i t u t e o f P o l i ti c a l S c i e n c e . ( E a c hp o i n t r e p r e s e n t s a 2 - y e a r av e r ag e a n d s h o u l d l i e m i d w a y b e t w e e n y e a r m a r k s . )A p p r o x i m a t e t r a n s l a t i o n s : D i p l o m - B . A . o r B . S c . ; P r o m o v i e r u n g - P h . D . ; H o c h s c h u l -r e i f e - 2 o r 3 A - l e v e l s .

h o w e v e r , i n a n o b s c u r e p a s s ag e , s a y t h a t t h e i r li n e b is t h e u l t i m a t e n e wc a r e e r c u rv e , a n d a s c r ib e t h e " i r re g u l a r i ty a r o u n d 1 9 6 2 " ( 1 9 6 1 / 2 7 ) t o th eB e r li n W all a nd t h e b a d m a r k e t f o r n e w g r a d u a t e s w h i c h th is p r o d u c e d i nB e r li n ( w h e r e h a l f t h e a l u m n i w o r k ) . T h e r e w a s a b a d s l u m p i n th e c i t y , son e w g r a d u a te s o f 1 9 6 2 g o t a " b a d p r o f es s io n a l s t a r t " w h i c h t h e y n ev e rm a d e u p . B u t th is w o u l d im p l y t h a t t he lin e 1 9 5 9 / 6 0 - 1 9 6 1 / 2 w a su n u s u a l l y s t e e p , s o th a t t h e d o t t e d l in e b s h o u l d h a v e b e e n d r a w n s lo p i n gm o r e g e n t l y t h a n i t . T h i s is n o t i m p o s s i b l e : t h e r e is n o r e a s o n w h y b

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s h o u l d n o t c o n v e r g e u p o n t h e o r ig i n al c a re e r c u r v e, s h o w i n g t h a t p o l i t ic a ls c ie n ti st s o f a b i l it y e v e n t u a l ly m a k e t h e s a m e i n c o m e , w h e t h e r th e y s t a r tw i t h a d i p l o m a o r a d e g r e e . B u t t h e c h a n g e f r o m 1 9 6 1 / 2 t o 1 9 6 3 / 4 is v e r ys h a rp , s h o w i n g t h a t five years later ( i. e. in D e c e m b e r 1 9 6 8, a t t h e t i m e o ft h e s u r v e y ) t h e g r a d u a t e s o f t h e t w o e a r li e r y e a r s stil l h a d l o w e r i n c o m e s ,e v e n t h o u g h o n l y h a l f o f b o t h g r o u p s w o r k i n B e r li n. T h a t w a s " a b adp r o f e s s io n a l s t a r t " i n d e e d ! T h e a u t h o r s ' o w n e x p l a n a t i o n is t h u s i n c r e d -i bl e, a n d t h e t h e o r y t h a t w e h a v e h e r e s e c t io n s o f t h r e e c a r e e r c u r v e s ism u c h t o b e p r e fe r r e d .

I t i s i n a n y c a s e n o t i n d i sp u t e t h a t a n i n c o m e o f D M 1 9 0 0 i s n o wr e a c h e d s ix y e a r s e a r li e r, o r f o u r y e a r s o u t o f s c h o o l , i n s t e a d o f t e n .G e n e r a l e c o n o m i c g r o w t h , a n d g e n e r a l s h i ft s i n t h e d e m a n d f o r g r a d u a t e s ,c a n h a r d l y e x p l a i n t h is , s i n c e t h e i n c o m e s w e a re c o m p a r i n g w e r e a lle a r n e d a t t h e s a m e m o m e n t . T h e r e is s i m p l y m o r e d e m a n d f o r y o u n ga l u m n i t h a n f o r o l d e r o n e s, a n d i t is f i r m l y re l a t e d t o a c a d e m i c u p g r a d in g .B u t is i t r e l a t e d t o h u m a n c a p it a l? I t w o u l d s e e m r a t h e r n o t , s in c e t h e r ea lc h a n g e s w e r e m a d e i n 1 9 5 2. T h i s is t r u e o f b o t h l e n g t h o f c o u r s e (a si n d i c a t e d o n t h e f ig u r e ), a n d c o u r s e c o n t e n t . T h e e v o l u t i o n f r o m a n a d u l te d u c a t i o n s y l l ab u s t o a u n i v e r s i ty s y l la b u s i s s h o w n a t fi ve d i f f e r e n t d a t e s( p p . 4 7 - 8 ) : t h e r e a l c h a n g e c o m e s a g a in i n 1 9 5 2. I t s e e m s t o b e r a t h e rt h e l a t e r f o r m a l c h a n g e s t h a t r a is e d t h e c a r e e r cu r v e.

T h e O t t o S u h r c a se is o n l y s u gg e st iv e . I t c a n b e p r e s e n t e d a s t h en o r m a l m a r k e t i n g d i f fi c u l ti e s o f a n e w p r o d u c t , t h e p o l i t ic a l s ci e n ti s t: i tt o o k 15 y e a r s t o p e r s u a d e t h e m a r k e t o f th e p r o d u c t ' s v a l u e . O r i t is a c a seo f S N C : b u y e r s w e r e w i l li n g t o p a y m o r e a n d s el le rs t o d e m a n d m o r e f o rt h e p r o d u c e o n c e i t w a s p r o p e r ly p a c k a g e d ( 1 9 5 6 - 6 3 ) , r eg a rd l es s o f i tsc o n t e n t , w h i c h w a s u n c h a n g e d a f t e r 1 9 52 . O r , e v en , is i t r e a ll y a c a se o fh u m a n c a p it a l w o r k i n g p r o p e r l y : s u b t l e i m p r o v e m e n t s in t h e q u a l i ty o f a ne s s e n ti a ll y v o c a t i o n a l c o u r s e , n o t c a u g h t b y t h e r e s e a r c h p r o j e c t a n d it sq u e s t io n n a i r e , a c c o m p a n i e d r a t h e r t h a n p r e c e d e d f o r m a l u p g r ad i n g , andwere accurately/udged by employers? T h i s i s h a r d e r t o b e l ie v e .

Re f e r e n c e s

B e r g , I . ( 1 9 7 0 ) . E d u c a t i o n a n d J o b s . N e w Y o r k : P r a e g e r .B l au g , M . ( 1 9 7 1 ) . " T h e C o r r e l a t i o n b e t w e e n E d u c a t i o n a n d E a r n i n g s: W h a t D o e s I tS i g n i f y ? " H i g h e r E d u c . 1 : 5 3 - 7 6 .C l i n e , W i l l i a m R . ( 1 9 7 2 ) . P o t e n ti a l E f f e c t s o f I n c o m e R e d i s tr i b u ti o n o n E c o n o m i c

G r o w t h , L a t i n - A m e r i c a n C a se s. N e w Y o r k : P r a e g e r.C o m m i t t e e o n H i g h e r E d u c a t i o n ( 1 9 6 3 ). H i g he r E d u c a t i o n : R e p o r t o f t h e C o m m i t t e ea p p o i n t e d b y t h e P r i m e M i n i s t er u n d e r t h e C h a ir m a n sh i p o f L o r d R o b b i n s ,1 9 6 1 - 6 3 . C m n d . 2 1 5 4 . L o n d o n : H M S O .

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Doeringer , Pe te r B. , and P iore , Michabl J . (1971) . I n t e r n a l L a b o r M a r k e t s a n dM a n p o w e r A n a l y si s. Le x in g to n , Ma s s : He a th .

Gr i li c he s , Z . (1 9 6 4 ) . "T h e A g r ic u l tu ra l P ro d u c t io n F u n c t io n , " A m e r . E c o n . R e v .D e c e m b e r .G r i li ch e s, Z . ( 1 9 7 0 ) . " N o t e s o n th e R o l e o f E d u c a t i o n . . . " S t u d i e s i n I n c o m e a n d

Weal th , v o l. 3 5 . N e w Y o r k : C o l u m b i a U P.Gr i l ic h e s , Z . a n d Ma s o n , W. (1 9 7 0 ) . "Ed u c a t i o n , In c o m e a n d Ab i l i ty . " Mime o .Ha r tu n g , D . , Nu th ma n n , R . , a n d Win te rh a g e r , W. D . (1 9 7 0 ) . Poli t io logen im Beruf .S tu t tg a r t : K le t t .Jencks , C. (1972) . I ne qua l i t y . Ne w Y o rk : Ba sic.L a y a r d , R . ( 1 97 1 ) . " E c o n o m i c T h e o r ie s o f E d u c a t io n a l P l a n n i ng . " H i g h er E d u c a t i o n

Re s e a rc h Un i t , L o n d o n S c h o o l o f Ec o n o m ic s a n d P o li t ic a l S c ie nc e . Mime o .Ra d o , E . (1 9 7 1 ) . "Th e Ex p lo s iv e Mo d e l . " G la s g o w Un iv e rs i ty . Mime o .R ic h a rd s o n , G . R . (1 9 7 1 ) . "H u m a n C a p i t a l a n d th e M a rk e t fo r P h y s ic ian s in th e U .S . "

Co lu m b ia Un iv e rs i ty P h.D . Th e s i s.Wi le s, P . J . D . (1 9 5 6 ) . "T h e Na t io n ' s In te l l e c tu a l In v e s tm e n t , " O x f o r d In s t i t u te o fS ta t is t ics Bul le t in . Au g u s t .Wi le s, P . J . D . (1 9 6 9 ) . "D ie Ba u c h s c h rn e rz 0 n ein e s F a c h id io te n , " In D . A . M a r t in , e .d . ,An ar c h y and Cu l tu re : Pr ob le ms o f the Con te mpor a r y Un iv e r si ty . L o n d o n :

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the correlation between education and earnings

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