Heterogeneity in the Returns to University Education - Essay Example

Heterogeneity in the returns to education College: Introduction In the recent years there have been reports of eminent student debt levels. This has caused many to wonder whether college education is still worth the investment. There exists a need to rethink about it. This paper tries to survey literature with the aim of finding out the how the returns are. It is notes that the returns have significant heterogeneity and try to find justification for this case (Philip et al., 2013). Through the ages, society has tried to seek new ideas. Knowledge has always been considered a treasure and tool for growth and development. The famous Nelson Mandela once quoted, “Education is the most powerful weapon.” He stated that the weapon could be used to change the world. It is almost a general rule and more so a craving by any parent that their kid goes to college or university at some point in time. Cases have been observed where most parents have mounted pressure on their kids and even went ahead to iterate how it is not an option for their kids not to attend college. Loosely speaking, good life begins with going to college. This is said to be a place designed for education and examination. The university enables analytical thinking and makes individuals innovative and adaptable. Joining university has been associated with various reasons. People have had motives to attend college.one of the reasons includes developing skills for employment, the student gains experience on a chosen subject and goes on to learn how to use the information to solve real problems in life. This can be said to be the major driver of university education. The people who are already employed still find their way into the universities. This is in order to gain higher qualifications that in return will earn better salaries. The society also, from its culture and the perception of people about education, creates a drive for higher education. This is in the sense that for one to have self-confidence and be viewed as responsible has to have a title or even better, have titles. From the perspective of the society, and from the belief that university education is very important, this paper tries to find out how true this faith is. How much can one have in return for university education? The returns on university education have varied form experience. Great universities of the world have produced great scholars and world leaders. Thanks to the input into them. Renowned leaders like Theodore Roosevelt, a Nobel laureate, who was in Harvard in 1880 and barrack Obama, who also studied law in Harvard. It can be assumed that their success owed to their passing through college. At this age it is difficult for any state to have its president or prime minister who never went to college. On the contrary, as much as there are uncountable successful graduates, still notable are dropouts who are extremely successful. The billionaire Bill Gates, the deceased famous Steve jobs as well as Mark Zuckerberg, are some of the stinking rich drop outs. Can this justify an idea that life can be better even without university? Alternatively, this is just exceptions in the whole picture. This paper tries to gather data to look critically into the returns of university education. Education is considered an investment that will in the long run the investor looks forward to achieving gains. This in many instances may not be the result, and the investment like any other can be either good or bad. It is important to find out the returns in higher education. This will address the general conceptions that exist. Most of the time, people have had frustrations since, after working so hard to do what was said to be right, they were, unfortunately, disappointed at the end of the hard earned struggle. This study is prompted by the unemployment rate among the youth. Recent surveys indicate a huge gap in the unemployment with most youths remaining unemployed even after completing their university education. Literature survey The literature surveyed included the already documented and published research. Opinions and myths about university education exist, and graduates have different expectations from their years of study. The study aims at finding the probable fraction of university graduates who are directly benefiting from their college education. Since education has always been encouraged, and governments have seen it as a way to build their capacity, it was necessary to find out the facts about university education. The study tries to find out the expectations and goes ahead to investigate their reality. Every year brings out graduates with a recorded figure of 1.5 million graduates every year. This, however, comes as a mixed blessing, the joy that comes with a hard journey through education and the frustration of realizing that there are no ready jobs waiting (Klassen, 2013). Data analysis The data for this survey was sourced from most recent surveys. The data of interest included higher education data, employment and unemployment data. Literature on the benefits of education and expectations of graduates was studied. This data was majorly sourced online, and a combination of the datasets was to be made to come up with a statistic. Data collection for the survey was done online and for this reason had several drawbacks as well as benefits.it was able to get a bigger picture from already carried out surveys that had huge samples. This is seen to save research resources including time, and it is both faster and cheaper. It also facilitated the use of expert researchers and their findings. This formed data to this study. This data, however, is exposed to the biases, omissions and analysis errors of the source. The limitations noted nonetheless do not discredit the findings herein. The data were selectively chosen, and credible sources picked. Results Following the hypotheses that there is less return to university education, and basing this argument on the premise of previous research which suggested shrinking jobs and frustrations to university graduates (Tom, 2013), and as much as there is a dilemma in the students, they do not stop to expect. These expectations are seen to spread back to the parents. This, even so, is fantastic. Graduating from a good university with good grades is not always key to a good job. Similarly, even after getting a job, the salary and condition met is seen to be much lower than the expectations made. Statistics indicates that nearly half of the youth in Canada are currently in jobs that do not offer a lot to save for retirement let alone enable them buy a home. It is further observed that most Canadian youth, who are below thirty years, it is a struggle to find jobs (Josh, 2013). The market prefers older individuals who have had experience in addition to their college degree. A degree alone is not good enough and this poses yet another challenge after school, which can be frustrating (Kolm, 2013) The job market is seen to embrace an experience more than just a university degree college education, and this makes it hard for the graduates to land a good job. The 2006 census data indicates that one in every four middle aged persons with university degrees is employed full time jobs that do not match their level of education (Josh, 2013) This poses a question on whether the degree was of importance in the first place. A university degree is portrayed as a real solution to teenagers and those aspiring to get it. This builds in the high expectations way back in their early years. The young people are always taught that going through a post-secondary level will earn them a satisfying and nice career which will eventually lead to a life full of comfort. Disappointing enough, this is not always the case because after graduating and applying to the good jobs, they find out the real situation which is unwelcoming. The existing jobs, which the graduates hope to take over, tend to be the domain of people who are experienced and skilled for years and for this reason a fresh graduate cannot dream to secure it. University education nevertheless has been seen to pay back despite the patches of dissatisfaction and frustrations. Cases exist where education has been the flag bearer and a pull towards financial security. The youths have been seen to struggle with unemployment but later in their years, they finally secure a job. This is mostly seen as a result of gained experience over time. This survey noted a considerable heterogeneity among individuals. This was observed for both individuals who went through the same system, and were supposed to end in a similar line of specialty. Reports indicate little overall employment since august 2013 (Philip et al., 2013). The Canadian universities have been recorded to educate more than 1.5 million students every single year (Klassen, 2013), this can be interpreted to means an approximate of the same number of graduates are available for employment each year. Putting this figure side by side with a figure of 54000 new jobs created in May 2013, and owing to the insight that this was one of the best since the year 2002, it clearly depicts the shortage (Josh, 2013) Heterogeneity in the returns to university education College is costly, but it is said ignorance is more costly. Before deciding to go to college, various factors are to be considered. This decision is not easy since different individuals vary in both ability and skill, and this will affect how one will benefit relative to the other. How worthy is it to attend college? Since different courses in college will direct one to a specific career, the different individuals from college will have a variety of professions. This will lead to both varying costs and benefits. The heterogeneity in returns will be reflected further in cases where one secures an employment earlier than the other. The results explain some important issues on returns to university education. Firstly, due to the varying nature of humanity, individuals will extract varying returns from university education. Secondly, there may be a need for further education in order to gain the real returns to university education. However, not all individuals can financially be able to fund the extra cost. This further widens the heterogeneity of the returns between individuals. Lastly, even in the case zero financial constraints and everyone has no limit to furthering their education to that optimal level, behavioral factors and communication problems can lead to differences in individual returns. However, it is evident that those people having university degrees earn more compared to those with lesser qualifications in the same field (Philip et al. 2013).The older group is found to be more employable, than the less experienced youth population. This is because it is believed they have a better understanding of the work. Methodology To understand the heterogeneity of the returns to university education, data from national surveys, and published articles were used. The samples were a representative of the whole nation. The information used was one which was collected from the year 2003 to 2014.the respondents to the study was restrained to the youths in the universities and those who have recently just graduated. The analysis proceeded in three steps. Firstly, estimated level of expectation on the students after they graduate from university was determined. Generation of propensity scores was used through estimation and with the aid of a regression model. Next was estimating the fraction of the total admissions that dropped out in the way. Finally, the available positions for graduates for employment analyzed. The relationship of the variables was tested by linear regression rather than multiple regressions. Y = a + bX + u Where ’Y’ is the variable being predicted; ‘X’ is a variable used to predict “Y”; ‘a’, is the intercept; ‘b’ is the slope and u is the regression residual. This study limited itself to a linear regression where university education was to be used to find whether the returns were worth the investment. The study tried to find the relationship of university education with success quantifying it financially. The study viewed such outcomes like employment, as a direct result of training to be of financial value. Conclusion Findings On carrying out the survey and canvassing the different data sources, this paper finds out that still misconceptions exist. It observes that a university graduate mostly goes to college solely with the aim of getting good employment. This perception is seen to originate from their parents, or their earlier teachers in school. The admission to the university on itself builds significant expectations on the candidates. The study also notes a significant importance attached to having a university education. Parents go an extra mile to try and woo their kids into the urge to join a university. From the study, it is evident that a changeover from college life to career life is not an easy task.one has to grapple with the challenges that are offered by the corporate world. Despite the tremendous differences on the returns to university education, this paper goes ahead to conclude that university education is compulsory despite the fact that an average student will have fewer returns to his education. It is noted that other non-monetary returns exist which may not be accurately quantified but contribute to the general satisfaction. The conclusion is reached that college education pays off. This paper recommends policy measures to better the whole learning process. Since education is compulsory, it is important to make it more attractive. This will in turn lower the burden of education loans, and make the return more attractive. References Kolm, J. (2013). Canada broadcasting corporation, http://www.cbc.ca/news/canada/why-are-so-many-of-canada-s-young-people-out-of-work-1.1370260 Retrieved on march 13, 2014, from cbc news: Oreopoulos, P. (2013). Making college worth it: A review on the returns to higher education. Toronto, Ontario, Canada. Klassen, T. (2013, 6 23). Opinion http://www.thestar.com/opinion/commentary/2013/06/23/the_university_myth: Retrieved on 14th March 2014 Read More