Class Dismissed and Signaling
By Bryan Caplan
In Class Dismissed: Why We Cannot Teach or Learn Our Way Out of Inequality, John Marsh argues that education is overrated. Unions and redistribution, not education, are the best remedy for poverty and inequality. I’m clearly not Marsh’s intended audience. I don’t care about equality, deem most poor Americans undeserving, frown upon unions, and oppose redistribution. But I genuinely like Marsh’s book.
Marsh’s sheer incredulity is his strongest asset. What would a labor market composed exclusively of college graduates even look like?
[W]e cannot all be symbolic analysts. Someone has to take care of our symbolic analyzing minds when the bodies that house them need to eat Happy Meals, get driven to the airport, wear clothes, be protected, or be taken care of when the bodies that house those minds start falling apart. The question is not whether those jobs will exist – they will – but what they will pay. More education would not seem to make them pay anymore.
[A]ll the education in the world – or all the world with an education – will not make [low-skilled] jobs pay any more than they do. A waitress with a B.A. still hustles for tips. Nor are these jobs likely to go anywhere soon. Without them, the U.S. economy would grind to a halt. Happy Meals would go unassembled and unserved; customer service calls unanswered; hotel rooms uncleaned; and the aged and sick would go unattended.
At times, Marsh sounds like he believes in the signaling model of education. But it’s hard to tell. On p.19, he lists everything he’s not arguing, including the view that…
[S]ince college teaches “few useful jobs skills,” a degree, as the economist Bryan Caplan puts it, merely signals “to employers that graduates are smart, hard-working, and conformist”…
One page later, though, Marsh approvingly quotes me: “Going to college is a lot like standing up at a concert to see better. Selfishly speaking, it works, but from a social point of view, we shouldn’t encourage it.” His next paragraph suggests that he agrees with me, but simply has a different focus:
Unlike others who argue this point, however, my concern is not with the inefficiencies that come from everyone standing up to see better but, rather, the injustices that result. That is, my concern is with those who cannot stand up, those who, either because of lack of ability, lack of interest, or other barriers to entry do not or cannot earn a college degree.
Unfortunately, Marsh’s position on signaling never gets much clearer. He spends a lot of time attacking Goldin and Katz’s The Race Between Education and Technology. But on the simple human capital model of the return to education, G&K are right and Marsh is wrong. If more education genuinely makes workers more productive, then more education makes our whole society richer. That includes people “left behind” by the education bandwagon. If more people go to college, less-educated workers enjoy less competition and richer customers. Lower supply and higher demand equals higher wages – even if you’re serving Happy Meals and cleaning hotel rooms.
The signaling model is the only stable foundation for Marsh’s incredulity. As long as you accept that education simply causes higher worker productivity, education is a great way for individuals and societies to enrich themselves. Indeed, education looks a lot better than unions and redistribution, because it actually creates additional wealth to distribute. If, in contrast, education to a large extent merely certifies higher worker productivity, education is an inefficient and regressive form of redistribution. Why can’t Marsh just say that?