Hiring College Graduates to Flip Hamburgers: An Endogenous Theory of Professionalization
Author(s)Ghaffarzadegan, Navid; Hue, Yi; Larson, Richard Charles
In this paper, we offer an endogenous theory of professionalization and ever-higher degree attainment. We theorize that higher education is a self-driving growth engine. We introduce two endogenous mechanisms that act on the education enterprise, causing the number of educated people to increase dramatically with relatively short-term changes in the job market. Using an illustrative dynamic model based on simple rules of degree attainment and job selection, we argue that these self-driving growth engines are adequate to over-incentivize degree attainment, and can affect the match between supply and demand for college-educated labor. We also show that the mechanisms magnify effects of short-term recessions or technological changes, and create long-term waves of mismatch between workforce and jobs. The implication of the theory is degree inflation, magnified pressures on those with lower degrees, underemployment, and job market mismatch and inefficiency.
Massachusetts Institute of Technology. Engineering Systems Division
ESD Working Papers;ESD-WP-2014-05