Mitchell’s Musings 5-9-16: Making the Grade Daniel J.B. Mitchell There is an old (but ongoing) debate about the economic value of general education, particularly at the level of higher education. We know that more education is correlated positively with what students eventually earn on the job. So there seems to be a reward by employers for added education. But is the association the result of some tangible job skill acquired with education? Or is there some kind of creeping credentialism under which workers compete for jobs by trying to be more educated than the average? The debate is really focused on fields such as humanities and social sciences in which – apart from the academic labor market itself – the knowledge acquired in college courses is not specifically sought by most employers. For most jobs, as an example, your knowledge of English literature may not be called upon very often. Yet employers say that they want employees who have skills that they associate with general college education. In certain fields, e.g., engineering, particular skills that have a more direct vocational link to jobs can be cited. But in the humanities and social sciences, the skills involved seem to be more amorphous, e.g., ability to learn, to organize, to evaluate. Once on the job, employees of all types are subject to some form of periodic evaluation. Most often, an important element of subjectivity is involved in these evaluations. In larger firms, some kind of evaluative rating is produced for various attributes and added monetary compensation may flow as a result of good ratings. Opportunities to advance on the job (promotion) may also be linked to the results of performance appraisals. Of course, some jobs entail easily countable outputs – widgets produced, value of sales made, etc. However, even in jobs we associate with readily countable outputs such as production operatives in manufacturing, the use of mainly objective compensation systems (piece rates) seems to be in a long-term decline.1 In white collar and professional fields, a typical reward system – particularly where “countability” of output is low - is for employees to be evaluated by their supervisors for various traits and behaviors they exhibit. And such evaluation schemes are inherently subjective, even where formal personnel appraisal forms with rating scales and the like are in use. Being evaluated by your boss may be arbitrary or even unfair – particularly as perceived by someone who receives a low rating. But what is the alternative? As
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http://www.nber.org/papers/w16540.pdf.
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