Work-education mismatch: An endogenous theory of professionalization

Abstract

We model the education-workforce pipeline and offer an endogenous theory of professionalization and ever-higher degree attainment. We introduce two 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 our illustrative dynamic model, we argue that the system is susceptible to small changes and the introduced self-driving growth engines are adequate to over-incentivize degree attainment. 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. Keywords: System dynamics; Education policy; Inefficiency; Education mismatch; Public policy