WASHINGTON, DC – In the summer of 2019, an impressive array of scholars and higher education experts authored a series of foundational research papers that would come to inform the groundbreaking findings and approach to measuring postsecondary value released earlier this year by the Institute for Higher Education Policy’s (IHEP) Postsecondary Value Commission.
Among those scholars published was William A. Darity Jr., founding director of the Samuel DuBois Cook Center on Social Equity at Duke University and the Samuel DuBois Cook Professor of Public Policy, African and African American Studies and economics at Duke University.
Darity’s paper, co-authored with recent Duke undergraduate and former Cook Center research assistant Miles Underwood and entitled “Reconsidering the Relationship between Higher Education, Earnings, and Productivity,” is available to be read here.
In their paper, Darity and Underwood probe the assumptions in the traditional economic theory that links educational attainment to higher wages and productivity: the belief that additional educational attainment increases individuals’ productivity and thus earns them greater compensation.
However, as Darity and Underwood patiently demonstrate, this model falls apart when considering the balance of evidence. Greater education sometimes in fact leads to the same level of productivity, via credential inflation, or lower productivity, as employees feel overeducated for their positions. Compensation for CEOs has skyrocketed in a manner that suggests their wages are completely untethered to productivity. And labor market discrimination, as shown through gender and racial earnings gaps and other measures, likewise “drives a wedge between any ostensibly consistent relationship between wages and productivity.”
In summary, the authors write that “the correlation between higher wages and earnings and undergraduate and postgraduate degrees does not indicate causation.” Moreover, they make the case that the value of higher education should not be measured solely through one’s earnings, and that economists and thinkers must consider “an alternate vision” of how these elements interact.
“The relationship between higher education and wages is not a clear picture but a complex inkblot,” said Darity. “We must continue to study this relationship and consider it through novel and creative lenses, or else we risk reaching naive conclusions from biased prior beliefs.”