گزینه واقعی، بازده سرمایه گذاری در سرمایه انسانی و سیاست های آموزش عالی

This paper incorporates the concept of real option into a modified Harris–Todaro model to investigate the relationship between higher education and unemployment rates. We found that the real option value of waiting to invest in graduate school education will decrease when the expected wage rate of labors with an undergraduate degree becomes relatively lower than that with a graduate degree. As a result, more undergraduate students will decide to go to graduate schools immediately after graduation. As the supply of labors with a graduate degree increases and the job creations fail to meet the increasing demand, those who cannot get a graduate-level job will be willing to accept job offers lower than their education level. Our modified Harris–Todaro model shows that it will lead to an increase in the number of unemployed and underemployed higher educated labors. This explains why the unemployment rates for higher educated labor are relatively high in some developed countries.

It is widely recognized in the economics of human capital that educational returns are positively correlated with schooling years (e.g., Denny and Harmon, 2001, Hungerford and Solon, 1987, Mincer, 1974, Park, 1999 and Silles, 2008). There are basically two schools of thought about the returns to education. One considers wages as educational returns in order to identify sheepskin effects based on various step-function specifications. The other treats education as a signal for employers to recognize individual ability in the labor market. According to the screening theory, diplomas are important for primary matching labor choices in work, however, diploma effects will decline as working experience increases. That is, education demand is negatively correlated with working experience. In contrast to the screening theory, the human capital hypothesis asserts that investments in education can improve labor skills. Therefore, employers are willing to pay more for employees with a higher education diploma than those with a primary or secondary education diploma. The real options method has attracted significant interests in the fields of individual decision making for the purchase of durable goods, employee hiring, career choices, and human capital investment (see e.g., Ashenfelter et al., 1999, Card, 1999, Harmon et al., 2003 and Jacobs, 2007). In comparison with the net present value (NPV) method, the real options method is more capable of incorporating return and cost uncertainties into the individual human capital investment decision-making process (Groot and Oosterbeek, 1992 and Hogan and Walker, 2007). Friedman (1962) claims that human capital should be considered as non-liquid assets. That is, individuals can recover their foregone wages and schooling expenditures only after they start working. Therefore, the educational investment is considered an irreversible sunk cost. During the human capital investment decision-making process, individuals can decide when to invest in order to reduce risks in the labor market. The real options value of educational investment is mainly determined by the current average wage rates, estimated direct and indirect educational expenditures, and expected future wage rates after graduation (Jacobs, 2007, Palacios-Huerta, 2004 and Palacios-Huerta and Serrano, 2006). For example, the real options value of higher education investment for an individual with a Bachelor's diploma is the educational risk premium subtracted by sheepskin effects. Because the future wage rate and the probability of obtaining a job after graduation are both uncertain, it is important to take both factors into account in an individual's human capital investment decision-making process. The issue of relatively high unemployment rate for higher educated labor in some developed countries has been widely studied since the 1990s (see e.g., Groot and van den Brink, 2000). Most previous literatures conclude that overinvestment in higher education could lead to the supply surplus of higher educated labor based on either qualitative analysis or simple quantitative models. There is still lack of a theoretical model to investigate the positive relationship between higher education and unemployment rates in some developed countries. In this paper, we try to resolve this important issue by incorporating the concept of real options value into a modified Harris–Todaro model. According to the Harris–Todaro migration model (Harris and Todaro, 1970), the expected wage rate in the urban modern sector plays the key role in the migration decision making process for rural labors. A similar analytical framework is developed in this paper by replacing rural and urban wage rates with undergraduate-level and graduate-level wage rates. However, in addition to expected wage rate, we further incorporate real options value in the decision making process for an undergraduate student choosing between job markets and graduate schools. This implies that the real options value of higher education investment and the re-examination rate (or reapplication rate) will affect the choice between job markets and graduate schools for an undergraduate student. While the Harris–Todaro migration model assumes that the rural labor market will be cleared with urban labor migrations, we assume that unemployment exists for labors with an undergraduate degree. Labors with a graduate degree that accept a job below their educational level are considered as underemployment. In this paper, we attempt to identify how government's higher education expansion policy affects the relationship between the unemployment rate of labors with an undergraduate degree (undergraduate-level labor), the re-examination/reapplication rate of people who have decided to go to graduate schools but failed to get accepted, and the unemployment rate of labors with a graduate degree (graduate-level labor). According to our analysis, overinvestment in higher education is very likely to cause the increase in the unemployment rate of higher educated labors and the decrease of higher educated labor wage rates. The magnitude of these negative impacts will depend upon the demand of higher educational labor markets. Therefore, our model can be used to explain why there are relatively high unemployment rates for higher educated labor in some developed countries. The remainders of this paper are organized as follows. Section 2 demonstrates how to incorporate the real options concept into the decision-making process of human capital investment. In Section 3, we develop a modified Harris–Todaro higher education investment model to explain the relationship between unemployment rate, re-examination/reapplication, and unemployment rate of higher educated labor. In Section 4, a graphical analysis is used to explain the impacts of overinvestment in higher education on the unemployment, re-examination/reapplication, and wage rate of higher educated labor. In the last section, we summarize the main conclusions and implications for higher education policy.

The expansion of higher education has been considered as a key element to facilitate a country's economic growth and international competiveness. Many wealthy developed countries and poor developing countries have allocated a great amount of resources into undergraduate and graduate school programs. In addition to regular higher education programs, many countries also have on-job education programs that provide individuals the opportunity to invest in higher education even if they have entered the labor market for a long time. Therefore, individuals can reenter education at a later age which suggests that the option to go to work is not really irreversible. However, it is irreversible once the individual decided to invest in higher education. Because the higher education program is somewhat difficult to be shut down once it has been established, it raises the issue of overinvestment in higher education in some developed countries when the unemployment rate for higher educated labor started to increase. By incorporating the concept of real option into a modified Harris–Todaro model, this paper demonstrates why the unemployment rates for higher educated labor are relatively high in some developed countries. It is well-known that the wage rate for graduate-level labor is relatively higher than that for undergraduate-level labor, and hence the value of the option to postpone higher education investment is relatively low. As the wage rate for undergraduate-level labor remains relatively low and the government devotes more resources into graduate school programs, individuals will be less reluctant to invest in higher education immediately after graduation. However, it is generally difficult for a country to create sufficient job opportunities to absorb the increase of graduate-level labor supply especially when the economic growth is lower than expected. Due to the illiquidity and irreversibility of education investment, unemployed graduate-level labors will be willing to accept job offers lower than their education level. This will crowd out the job opportunities for undergraduate-level labors and increase the unemployment rate for the entire higher educated labors. These adverse phenomena can be explained by our modified Harris–Todaro model as the number of graduate-level labors increases under the government education expansion plan. Based on our analysis, the unemployment rate of higher educated labors will increase and the wage rates will decrease due to inadequate higher education expansions. Therefore, an integrated higher education policy based on both political factors and economic efficient criteria is needed to mitigate the adverse impacts of higher education expansions on labor markets.