DEAKIN UNIVERSITY ASSIGNMENT ATTACHMENT SHEET

Student IDs (all members):

211817499

211704722

213053287

800722366

Student Names:

Abhey Mehta

Ketki Phatak

Prateek Jain

Samrat Roy

Unit Code: MPE711 Unit Name: GLOBAL TRADE & MARKETS

Group No: 4 Topic: Higher education offers better paying jobs

Unit Chair: AARON NICHOLAS

Due Date: 16th September 2013

PLAGIARISM AND COLLUSION Plagiarism occurs when a student passes off as the student’s own work, or copies without acknowledgement as to its authorship, the work of any other person. Collusion occurs when a student obtains the agreement of another person for a fraudulent purpose with the intent of obtaining an advantage in submitting an assignment or other work. Work submitted may be reproduced and/or communicated for the purpose of detecting plagiarism and collusion.

DECLARATION I certify that the attached work is entirely my own (or where submitted to meet the requirements of an approved group assignment is the work of the group), except where material quoted or paraphrased is acknowledged in the text. I also certify that it has not been submitted for assessment in any other unit or course.

SIGNED: Abhey Mehta, Ketki Phatak, Prateek Jain, Samrat Roy

DATE: 16/9/2013

An assignment will not be accepted for assessment if the declaration appearing above has not been signed by the author(s).

YOU ARE ADVISED TO RETAIN A COPY OF YOUR WORK UNTIL THE ORIGINAL HAS BEEN ASSESSED AND RETURNED TO YOU.

Assessor’s Comments:

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Table of Contents

1. Abstract 2

2. Introduction 2

3.1 Hypothesis 3

3.2. Alternate Hypothesis 3

4. Literature review 3

5. Analysis for Hypothesis 5

6. Analysis for Alternate Hypothesis 9

7. Conclusions 12

8. Limitations 13

9. References 14

Total word count excluding abstract and references: 1996

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Abstract

This report covers the hypothesis and alternate hypothesis on higher education being helpful for getting a better paying job or not. We have looked into the most important tables and data available from Bureau of labour statistics for United States and also from relevant literature articles, newspaper articles for conducting this research. Also various tables, graphs have been used extensively in conducting this research and putting data on both the views before putting a concluding thought that higher education is necessary for an individual, as it’s not just helpful for shaping one’s career for its monetary benefits but there are other benefits of higher education like contributing to society, knowledge gain and happy living as well. The hypothesis is true and supportive based on the quantitative analysis done supporting that higher education does help in getting a more paying job.

1. Introduction:

Since increasingly more recruiters are generally requiring increased qualifications for standard entry-level jobs, a lot of investigators are generally seriously worried about no matter if increased qualifications are desired inside the fashionable work market. A lot more specifically, can a degree show the relevant skills meant for specific specialized vocations, or maybe can it basically provide them with a small gain whenever contending for jobs that is done that has a lower amount of learning? (Walters, 2004)

For many students preparing to graduate from high school, wondering whether or not they should pursue a higher education at a university or other learning institute is an issue that weighs heavily on their minds. It is a very difficult decision that depends on many different factors, such as the individual’s goals.

According to the US Bureau of Labour Statistics a study conducted by them resulted in saying that a person with a professional degree in 2012 earned $1735 weekly, while as one with no college degree earns $727(BLS 2013). Also the employments rates are better for individuals with higher studies.

While as some people choose to work minimum wage jobs while studying, or take other opportunities like opening their own businesses. This can end up making people large sums of money like Bill Gates, Gurbaksh Chahal, but the facts stated by the United States Bureau of Labour show that the vast majority of the time this is not the case.

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3.1 Hypothesis: Does Higher education offer better paying job and other benefits?

After finishing high school, each additional level of education brings economic security for students and their parents. It’s the best investment one can make is as it leads to benefits like better earnings, better jobs, benefits like health insurance etc.(Anglin 2012)

Higher level of education also leads to more active citizens than others as they comparatively spend more time in voluntary activities. They also vote more often and participate in communities. (Anglin 2012)

3.2 Alternate Hypothesis: Higher education doesn’t necessarily guarantee better paying job and benefits

On the other hand it is believed that many people are getting more educated day by day and it just cannot help one getting a better paying job. People can be very well paid by being tradesman and that doesn’t require a college degree. (Gobry 2013)

4. Literature Review:

4.1 The Relationship between Postsecondary Education and Skill: Comparing Credential-ism with Human Capital Theory

This paper talks about the requirement of a certain level of education by the employers for hiring the graduates. With the increase in such high level requirements for the employment, the researchers are trying to find the importance of higher education for these employment purposes.

The human capital theory is considered as an economic variable for the functionalist theory. It assumes that the increase in learning skills will result in an increased requirement of skilled workers. Therefore, an individual will keep learning until marginal cost exceeds the marginal benefits of education. The study also reveals about the appropriate job titles attained after acquiring the education. Sometimes more higher qualification holders are uncertain about the job they are performing is whether related to their level of expertise or not, but the other less qualified workers are less worried.(Walters 2004)

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Fig 1: Education-job-match by field of study.(Walters 2004)

The graph shows the level of un-related-ness of the jobs with the level of qualification for different fields. The graduates of field of humanities feel highly that their jobs are least related to their studies. The social sciences and art graduates are the next to think the same; the commerce graduates are somewhat satisfied with the relation of their schooling with their jobs having the probability of 0.61.

The second figure shows the requirement of more higher education whether is required or not for the graduates who are working.

Fig 2: Fit between education and work (Crosby and Moncarz 2006)

As can be seen in the figure, the graduates who find their job to be more related to their education, have an urge to go for further studies to enhance their skills and knowledge to increase their productivity as compared to the ones whose studies are not that highly related.(Walters 2004)

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4.2 Experiential Learning Theory

It provides a cutting edge of using style of the learning course of action and a multi linear model of mature advancement. The particular concentrate is with experience, which often acts as the major driving a car, drive within learning, because expertise is constructed throughout the transformative manifestation with one’s experience. It contains 2 different settings connected with gaining experience: concrete experience and abstract conceptualization. Moreover 2 different settings connected with changing the event take place so that learning is accomplished: reflective observation and active experimentation. These comprise a 4 level angling never-ending cycle in the experiential learning process. (Bisker,2011)

5. Analysis for hypothesis on: Does Higher education offer better paying job and other benefits

The below data has been taken from U.S Department of Labor from august 2012-2013 and states that unemployment rate is less for people (25 years and over) with higher degrees than any of the other. This increases gradually from people with higher to the least education. (BLS 2013)

Fig 3:Employment status of the civilian population 25 years and over by educational attainment, Bureau of Labor statistics (BLS 2013)

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Also mean weekly average earnings for people with higher degrees was taken from BLS and the ones with highest degrees (avg of bachelor’s & higher studies) had earned $1431 and higher among all the education levels below it.

Fig 4: Earnings based on education for 2012 (BLS 2012)

As per the projections from the BLS (Bureau of Labor statistics), fastest job growth in health & personal care, construction and social assistance is expected, resulting in 20.5 million jobs with 14.3% growth. These projections of 2010-2020 also illustrate that there is going to be need for education, training and experienced professional for such demand. Moreover, employment would grow by 21.7% for occupations, which require masters. Apprenticeship for jobs, which require training, may also grow significantly to 22.5%. (BLS 2012)

5.1 Quantitative analysis Correlation Regression AnalysisUsing the quantitative analysis, we have taken 2 variables- employment population ratio and their median weekly earnings for checking their relationship to be related or not. Firstly we have checked with the below scatter diagram, whether there is a positive relationship between the two variable which is true based on the scatter diagram. Then calculated the correlation regression as .877 using the excel tools which is a positive correlation as its greater than 0 and lesser than 1. The data has been used from BLS based on figure 3 for employment ratio and median weekly earnings from figure 4.

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Data for the year 2012

Less than high school 471 40.3High School graduate 652 54.3Associate degree 756 63.8Bachelor's degree and higher 1431.25 72.1

Correlation Regression for the 2 variables = 0.876969

Median weekly

earningsEmployment

population ratio

400 600 800 1000 1200 1400 16000

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20

30

40

50

60

70

80

Employment population ratio

Employment population ratio

Fig 5: Correlation regression between median weekly earnings and employment population ratio

5.2 Lifetime EarningsA higher degree recipient is expected to earn 66% more than a typical graduate in a 40 year work life cycle. The below diagram is based on the 2008’s sum of median for full time workers for each education level between age of 25-64.(Baum, Ma et al. 2010)

Fig 6: Expected lifetime earnings of different educational groups. (Baum, Ma et al. 2010)

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5.3 Earnings by Education Level and Gender

Earnings of full time workers with higher degrees have better earnings but there is lot of variation between both the genders. The graph shows yearly earnings of males and females in percentile. The bottom of the bar shows 25th percentile, 25% of people earn less, while as the top bar shows 75th percentile with 25% people earning more. The box shows median earnings of the group.

Fig 7: Median, 25th& 75th percentile earnings of full time workers, 25 years and above in 2008 for both genders. (Baum, Ma et al. 2010)

5.4 Unemployment

There is a lot of variation between the employment rates of individuals with higher education than with those of being just school graduates. As shown in below graph, unemployment rate is the least for all the years of higher studies between 1992 and 2009 than any of the other groups with lesser study qualifications.

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Fig 8:Unemployment rate from 1992-2009 based on education level (Baum, Ma et al. 2010)

6. Analysis for Alternate Hypothesis: Higher education doesn’t necessarily guarantee better paying job

The hypothesis is not necessarily true for American higher education as it is still in bad health. In worldwide ranking there is no doubt about their rankings to be top-most. But there are many instances when college graduates earn more and gather better benefits than those who don’t have a degree. (economist 2012)

6.1 Rising Education Fees:

There has been an increase in education fees and student debts in he past years (1978-2012) and on the other hand the educational returns compared to it have gone down.This can be seen in the below diagram, where the fees have gone up drastically.

Fig9: Rising fees, still worth it ?(economist 2012)

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For a student the cost of going to university has gone five times the inflation rate since 1983, which can be seen in above chart. The affordability has gone down and the debts have risen considerably since then. More than 60% of students take loans and for candidates who graduated in 2011 have an average debt of $26,000 based on a NGO – Student debt. (economist 2012)

6.2 Opportunities for Individuals with lesser qualifications:

There are thousands of high-paying jobs, which require just a minimal qualification of “high-school diploma”. A review over the employment and occupational profiles from the Bureau of Labor Statistics (BLS) was done to identify the number of jobs, which pay more with a lesser requirement of any higher and formal qualification other than the high-school diplomas. As a result, many risky jobs came up which require very less formal education but a strong on-the-job training and the certificates, as these jobs are very dangerous and require a strict knowledge of the practical skills.. The examples are: elevator repairers, nuclear power-plant operators, flight engineers, criminal investigators etc.(Frohlich 2013)

BLS has forecasted that between 2004-2014 there are going to be 55 million jobs for workers with no experience and for individuals with lesser educational qualifications based on the below graph.

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Fig 10: Forecast of No. High earning jobs for individuals with no bachelor degree for 2004-2-14 (Crosby and Moncarz 2006)

6.3 Numbers of jobs: BLS record shows the top 10 types of jobs of the total of 350 jobs which required high school diploma for 2010. The full data can be taken from BLS for all occupation levels. (BLS, 2013)

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Fig 11: Selected Occupational Projections Data for High School diploma or equivalent, total employment in 2010 (BLS 2010)

7. Conclusion:

The above report puts a light on both the aspects of the hypothesis as for some occupations, having a higher degree is more helpful while as for some profiles skills are of more importance. But, to sum up in whole the overall benefits which one gets from higher education is not just in monetary terms but also from the other benefits like social contribution, happy living, learning and knowledge achievement. Hence higher education for an individual should help in getting a better pay. The correlation analysis done as per figure 5 (excel) proves this hypothesis to be true.

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8. Limitations

In the current scenario time and value of money is very important. For one to make decisions about education, it should be solely their decisions about the choices of level of education they want to pursue. Although the increasing demand of expertise thus makes one to go after higher qualification and thereby making higher studies an important aspect of their life. On the other hand the income variable and other economic constraints, one has to restrict one from such decisions and to solely rely on their personal skill and knowledge to reach their goals. This report should be used keeping the above limiting factors in mind.

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9. References:

Anglin, L. L. (2012). "Higher Education Is Working ". Retrieved 15-09-2013, from http://www.huffingtonpost.com/laura-l-anglin/higher-education-is-worki_b_1963576.html?

Baum, S., et al. (2010, 12/9/2013). "Education pays 2010." from http://trends.collegeboard.org/sites/default/files/education-pays-2010-full-report.pdf.

BLS (2010). "Selected Occupational Projections Data."

BLS (2012). "Employment Projections: 2010-2020 Summary."

BLS (2013). "Economic News Release." Retrieved 12/9/2013, from http://www.bls.gov/news.release/empsit.t04.htm.

BLS (2013). "Employment Projections ". Retrieved 5/9/2013, from http://www.bls.gov/emp/ep_chart_001.htm.

BLS (2013). Employment status of the civilian population 25 years and over by educational attainment, Bureau of Labor statistics.

census (2010). Average earnings of full time workers based on education achievement U.S. Census Bureau,.

Crosby, O. and R. Moncarz (2006). "The 2004-14 job outlook for people who don’t have a bachelor’s degree."

economist(2012).Retrieved 13/9/2013, from http://www.economist.com/news/united-states/21567373-american-universities-represent-declining-value-money-their-students-not-what-it.

Frohlich, T. C. (2013). "Seven High-Paying Jobs With Only A High School Diploma." Retrieved 10/9/2013, from http://finance.yahoo.com/news/best-paying-jobs-high-school-103628796.html.

Gobry, P. E. (2013). "The Jobs Of The Future Don't Require A College Degree." Retrieved 10/9/2013, from http://www.forbes.com/sites/pascalemmanuelgobry/2013/05/07/the-jobs-of-the-future-dont-require-a-college-degree/.

Grover-Bisker, E.M. 2011, ‘Textbook Pages to Salary Wages: An Examination of the Relationship between Cooperative Education and early Employment Outcomes’, University of Missouri - Columbia, ProQuest, UMI Dissertation PublishingWalters, D. (2004). "The Relationship between Postsecondary Education and Skill: Comparing Credentialism with Human Capital Theory." The Canadian Journal of Higher Education La revue canadienne d'enseignement supérieurXXXIV(2): 97-140.

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Whitmore, T. and J. Waters (25 Mar 2013). Does Higher Education Pay Off?

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