Thursday, June 05, 2008

Overinvestment in Higher Ed and Immigration

By Richard Vedder

I had a superb and totally unanticipated example of the Law of Unintended Consequences brought to my attention while riding on a commuter train into downtown Washington, D.C. I am chairing a conference at the American Enterprise Institute tomorrow (June 6) on New Approaches to Higher Education: Solutions or Fads? where we will bring together leaders of the for profit industry and academics to discuss whether alternatives to the traditional not-for-profit four year institutions hold some promise for lowering higher education costs. If you are in the D.C. area, drop by. It begins at the Wohlsletter Conference Center on the 12th floor of the AEI building, 1150 17th St. N.W., at 9:00 a.m. Should be lively, informative, and fun.

Back to my epiphany on the train. I was reading a marvelous book Let Them In: The Case for Open Borders by one of my favorite journalists, the Wall Street Journal's Jason Riley. Jason makes a superb point. Many Americans don't want to do lower level jobs --picking vegetables, working in factories, running cash registers at Wal-Mart--so immigrants have been filling those positions, in some cases illegal aliens with very low levels of educational attainment. But why don't the Americans want these jobs, aside from issues of pay?

Riley opines that rising educational attainment has made many Americans believe that they have skills far above those required for manual labor, so they do not want to take them. That raises the possibility that the vast increase in college enrollments over time has had the unintended consequence of increasing the demand for immigrant labor, and has increased the flow of illegal aliens to the U.S.

So this is not misinterpreted, let me say I am a proponent of a large and vibrant immigrant population, and want to reduce visa and other restrictions on the free international flow of labor. Having said that, however, I do believe in the rule of law and wish we had more legal and fewer illegal immigrants (we should move to a market based immigration policy, but that is beyond the purview of this blog). And I do think a spillover impact of vast public subsidies of higher education may be why we are having more illegal aliens than otherwise would be the case.

1 comment:

Daniel said...

There is a plethora of details that relate to this issue. I only want to touch on the aspect that relates to the quantity of education that is demanded. There is some merit to Dr. Vedder's argument that Americans have become increasingly adverse to manual labor. One way to hedge the risk of ending up in this type work is to obtain a college education. For this reason, many young people enroll in college every year. A more educated population sounds like a terrific idea; however, it may be the case that this leads to a dumbing down of the classroom.

As more marginal students enroll in college, it is financially beneficial for the university to keep these students enrolled for several years. To make this more plausible, the classes may be made easier so that below average students don't flunk out in the first year. Over time, this trend turns into a norm and the quality of college graduates takes a nose dive. Similar to the financial markets, this loss of EVA results in a devaluation of the underlying asset.