Tuesday, April 28, 2009

Questions to ponder

Tomorrow, we will discuss asymmetric information problems in class. In our discussion of neoclassical labor markets, lurking throughout was an assumption of perfect information. Firms knew the quality of potential workers and workers knew the quality of potential jobs. This is clearly unrealistic. Firms and workers do not start with perfect information about each other. As we will see tomorrow, this can create problems in the labor market.

One potential solution to these problems is signaling. For instance, imagine there are two types of workers -- good and bad. Firms can't distinguish among them. As such, they offer a single wage to both types. However, firms would gladly pay more to good workers if they could identify them. This creates an incentive for good workers to distinguish themselves from bad workers. Signaling is one way to do this. The key assumption for signaling to separate good and bad workers is that obtaining the signal is sufficiently more expensive for bad workers than good, so only good workers want to obtain it.

College is the classic example of a signal. The assumption is that good workers find education cheaper than bad workers, so good workers go to college and bad workers do not. One implication of this view, however, is that college is not necessarily about skill acquisition. Rather, it is a form of ability revelation.

What do you think? Setting aside the consumption aspects of college (e.g., it is fun, you like learning stuff), do you think that college (for you) is primarily about signaling or investment in skills? That is, do you think that you needed to come to college to acquire valuable skills that you couldn't have obtained as cheaply otherwise (e.g., through on the job training/experience or self-study) or is your attendance here really just about separating yourself from others for whom the effort to complete college is too expensive?

This is an important question. College is very expensive (in terms of both time and money). If it is really just about signaling, is it conceivable that we could develop alternative methods of providing workers with credible signals of their abilities with far lower costs (and thus improve total welfare)?

I think that for me it is a little of both. By obtaining a bachelors, I am both "signaling" to my future employers that I have put some sort of effort into a "project" and thus showing them that I am capable of hard work and at the same time, I am investing in skills that could potentially help me in a future position with a firm. Overall though, I feel that it is different for everyone as well as for different industries. There are some jobs, for example in the retail industry, where a certain level of education isnt required to become a manager and that all of the knowledge you need to perform well comes from on-the-job training and experience.
As a senior in my last term, I can say that obtaining my bachelors degree is 95% about signaling. This is because I feel that I will be able to obtain a job through networking but in order to obtain this job, these jobs require degrees. in college I might say that I have enjoyed more leisure than I did hardwork in classes, because for me I was achieving a signal of a degree rather than a gpa with my degree. An interesting fact I always thought about would have been if I spent the money I did on college, to becoming a NFL kicker, I am sure if I spent 40 hours a week kicking a football and working my legs out I could become a backup NFL kicker.
While there is definitely some investment going on with college, I would say that for the most part, college is more of a signal to potential employers. First off, college does not prepare you fully for a job. Employers must continue with your training after they hire you. Also, this is not necessarily the college students’ fault, I think most of the blame should lie with the employers. It is the employers who are in effect “forcing” their potential employees to spend thousands of dollars in college. The second question asked relates to this. To learn all the skills that are acquired in college without being actually enrolled would be quite easy. Just because you are not enrolled in college does not mean that you cannot attend some classes. If you told a potential employer, however, that you had sat in on all the classes that you needed to in order to be a productive worker, I doubt that they would offer you the job. Most employers are too fixated on the actual degree rather than the skills someone has to offer.
I think the expectation is changed from the beginning when the college established. First time, I mean long long ago, the university is the place to study "pure academic." But now it is not. the degree is kind of requirement of getting job. getting more people go to the college, the degree is just basic line to get a job. in certain case of skill, it doesn't need a college degree. If I want to work with that, I do not seek to get degree. but the job I wantto get need higher education. And the degree can show about my interest and effort about that field. So I could say the degree can be the signal to the employer. I think the degree and grade can not garantee the all of person's abilities but it can tell somehow. So the employer can not ignore it.
I don't really think that this question can be approached in a binary manner. While a degree is often referred to as primarily a signal in and of itself, there are some other dimensions to consider. From my personal experience, the experience or knowledge investment has proven to be the more practically useful signal than the degree itself. This is because I have used my knowledge gained to complete jobs/internships, etc., which have proven to be much more weighted for employers' decisions. These signals have shown to be more practically useful because most of the employers which I approach only accept applicants with degrees. Thus, the field of consideration is already assumed to have attended college and a degree would not give anyone an advantage. You could consider the knowledge investment to be a secondary or practical signal. The degree signal allows a group of people to enter a pool, at which point the knowledge investment overtakes the degree signal in importance and usefulness.
I would have to say, it would be a little of both for me. By attending college I have learned/acquired new skills that otherwise would probably not have been obtained through anything like job training. But also at the same time I cam to college to get a degree, which would help me signal to potential employers down the line. I feel that college has provided me with both skills, and the ability to signal better.
Looking back at senior year of high school, coming to college meant a way to further my education and learn the skills that would be needed in my future profession. Although, after 4 years of schooling i have realized that this isn't the case. While i have learned some skills that could potentially prove to be beneficial in my career, i feel that a majority of what i have learned academically will prove to be almost worthless. I feel like college has been more a way of slowly adjusting to the real world and gaining the social skills to succeed. In my opinion, i feel like most things that i will need to know going in to a job, i will learn through training and experience, rather than my previous schooling.
I believe that the value of schooling is dependent on much more than simply having attended or not. Future biologists/chemists/physicists MUST have learned at least the basics of their science for them to have progressed through graduate school and become legitimate researchers. In fact, I think that most majors with research oriented career goals stake a lot of value in schooling. The main reason for this is that a lot of researching involves the direct regurgitation and manipulation of the theories and facts that we learn in schools, which are then presented in some fancy paper to be introduced to the newer generation of students.
In my case, I feel as if any job I get will void most of what I have learned in college, and inject in me a set of new skills that are actually pertinent to my job. As a signal to future employers(hopefullly it will prove useful),as a social tool, as a way to improve my pool skills, and as a way to live by myself and grow individually, it has been useful. In terms of the education that I got, it hasn't been too valuable.
I think that this is a very interesting question. I think it is some combination of a signal and an investment. I think this also varies by the individual. Someone who only takes the easiest classes possible in order to get good grades and a GPA that will appear as a positive signal, will see it differently from someone who takes harder classes to gain the knowledge and skills offered in this particular, more difficult, class. I think that most of what skills are developed in college are general skills rather than specific topics from a class. Things like how to work in groups, how to study, developing work ethic, managing time, etc. Also there are the skills developed in each individual class, like running regressions in EC 420, or calculating the present value of an investment. The point I would make about both of these sets of skills is that I don’t see why they couldn’t be developed through on the job training and experiences. The way each of these tools are used in an individual job will likely vary, and most of your daily tasks will be things learned on the job rather than in the classroom. For this reason, I would say that college is more about signals than an investment. Even though some skills are developed in college, there is no reason to think that these skills would not otherwise be developed on the job, or that they are more due to maturity, rather than the aspect of being in college.

Despite the fact that I do believe college is more about signaling than an investment, I am not sure what would be a good alternative method. Tests would not account for work ethic, the ability to work in groups, or presentations. It seems like there should be some kind of less expensive (both in time and money) way to accomplish the same task, but I don’t know what that would be.
To me college is both. Before I cam to college I thought it would mostly just signaling and from a skills acquisition perspective it may still be this way. However, being in college has taught me things that will help me be a happy an successful person both inside and outside of my career that don't specifically concern your classical business training. Such as learning about things that you never thought you would (those often odd general ed. requirements) that can enrich your whole scholastic experience and help to give you perspective to generate ideas that defy convention. In many ways this education outside of your major gives you a leg up on your competition who wouldn't have had this kind of whole-mind enrichment. In this way a college grad increases his competitive advantage by both signaling and giving himself a well rounded, fully developed mind.
I think it's a little of both but mostly "signaling" right now. When I started my college life, I would get some skills that need for specific job but right now, I'm looking for jobs so attending college and obtaining a bachelors is just showing my "signaling". In Japan, when people have a job interview, interviewers usually do not ask their acquired skills in most cases. They check our academic background and characteristics. However, obtaining a bachelors is a kind of getting self confidence and it is important for people to get jobs.
I think that it is all about signalling. I will probably never use 90% of what I was tested on in college in the job I am taking. I am signalling to my employer that I took a tough major that made me think and solve problems. That is why I was took a tough major, because I know that is what companies look for in their employees. Given a certain problem will you be able to work out the problem given.
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