American Colleges Lag in Meeting Labor Needs

Despite calls to more closely link higher education with job needs in the United States, American colleges are only "moderately responsive" to changes in the labor markets, according to a new working paper by three economists.

The study, whose preliminary results were presented on Monday at the annual meeting of the American Economic Association, found that some academic programs, such as computer science, appear to be highly responsive to labor-market trends, while others, like medicine and dentistry, are largely unaffected by changes in employment opportunities.

To study the links between higher education and job market, the authors — Ashok D. Bardhan and Dwight M. Jaffee of the University of California at Berkeley and Daniel L. Hicks of the University of Oklahoma — created a new data set by combining information on postsecondary-degree completion from the Integrated Postsecondary Education Data System of the National Center for Educational Statistics with employment and wage data from the Bureau of Labor Statistics’ Occupational Employment Database and the Current Population Surveys’ Merged Outgoing Rotation Groups.

The authors’ conclusion: In general, growth in employment opportunities and wages and demand for specific occupations do increase degree completion. But that relationship operates with a lag, with the strongest correlations occurring with a delay of four to seven years—the time it takes to earn an undergraduate or advanced degree.

Still, the authors found wide variations in industry-degree pairings. Degree programs for physicians’ assistants, insurance adjusters, and computer scientists were very responsive to market shifts. For example, as jobs and salaries in information technology swelled in the mid- to late 1990s, the number of degrees awarded in computer science nearly doubled from 1998 to 2002.

By contrast, the number of medical degrees completed has held steady over the past two decades, despite growth in wages and demand.

The authors suggest that several factors may lie behind those differences. Substantial regulation of fields like medicine can restrict enrollments or deter universities from establishing new programs. Requirements to pass qualifying examinations or obtain postgraduate certifications can prevent some people from pursuing a particular occupation. And the need to specialize or do on-the-job training can further reduce the connection between labor-market changes and degree completions.

As a result, employers must look elsewhere to fill jobs, such as hiring skilled workers from abroad.

The authors caution that their analysis does have some limits. First, because they focused on matching fields of study with specific occupations, the sample is composed predominantly of occupations that require a high degree of specialized training. The study also does not wholly account for the role job switching plays in meeting work-force needs.

But they argue that the findings have public-policy implications. If American businesses do not want to rely on foreign workers in particular fields, the authors note, they will need to consider strategies to expand the production of domestic degrees in key areas, such as financing research or graduate fellowships, lowering barriers to the creation of new specialty schools, or providing incentives for existing institutions to increase enrollment.


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