I teach a graduate course on educational development and policy. At the beginning of each year, I ask my students, “What is the purpose of education?” Of course, this is a question that goes to the root of pedagogy, and there are many ways to answer it. The direct meaning of the word “education” is “to teach and nurture,” but the content and teaching methods are diverse. In addition, the act of teaching is an intervention that requires a subject to learn, so it is essential to consider what knowledge is meaningful to the learner. However, students who have not yet been exposed to such pedagogical ideas often think of “the purpose of education” in terms of opportunities obtained through schooling, such as employment and higher education, rather than the content of knowledge and how to learn. Indeed, education does not refer only to what happens in school. Still, there is a general and persistent tendency to think that “going to school and getting a diploma” is education itself.
The reason is that in many societies, not just in Japan, there is a rule of thumb among family members and people close to students that the more educated you are (i.e., the higher the academic level of your school diploma), the better the job you will get. Indeed, when the number of university graduates was relatively small in my parents’ generation, it may have seemed as if a good college education would guarantee many job offers and even career advancement. Some parents may have been eager to educate their children because they were frustrated by their lack of education and did not want their children to have the same experience. When few people stay in the pyramid-shaped schooling system for a long time, an extended stay becomes an added value. However, the easily understood competition of length of stay loses its meaning when many people aim to achieve it in today’s Japan, where 97% of the population goes on to high school and 55.4% to university (according to FY2020 data). It can no longer be said that having a bachelor’s degree alone will increase one’s competitiveness in the labor market. At the same time, economic growth has been slowing down for a long time, and employers are facing more constraints than they did during the era of rapid economic growth when salaries and employment opportunities were expanding steadily.
The idea of having an academic background as an investment in one’s future is not viable in a society where one’s status and opportunities in the community are determined by one’s position, family background, race, and other attributes, yet the idea that one can prosper as long as one has academic experience seems to be a fair meritocracy . These days, it is not necessarily true that one can maintain a high market value in relative comparison with others if one continues to move up the stairs of the school education system, going from a bachelor’s degree to a master’s degree, and from a master’s degree to a doctorate. Even in fields such as engineering, where it would be advantageous to have specialized skills to find a job, a master’s or bachelor’s degree will often provide more employment opportunities in companies than a doctoral degree. Even in the humanities, going to graduate school does not necessarily increase the labor market value. The longer the years of education, the higher the hiring company’s starting salary, but a person with a high degree and age with no working experience may not be considered “cost-effective” by the company.
In addition, in actual work situations, there is not much hierarchy in the jobs of new graduates hired at the same time, and people who can do a solid job are often appreciated more than those who are selective in their jobs because of their higher degree. In Japan, the job offer rate for graduates of technical colleges is constantly above 100%, even when the economy fluctuates. In comparison, the job offer rate for university graduates in 2020 was 82.2% as of December. In other words, the demand for graduates of technical colleges, with their reputation for solid and industry-adaptive specialized training, is always high. In contrast, the job opportunities for college graduates are compressed in bad economic times.
This situation is caused by the inconsistency between the labor market and education, and to understand it, we need to think along two axes: vertical inconsistency and horizontal inconsistency. The vertical inconsistency relates to the number of years of schooling. Just as there are individuals who believe that they could not get the preferred job because they did not have enough education, there are times when employers believe that they would like to hire people with a higher level of education, but there are not enough of them. This is a case where the education level of many people is under-educated and does not meet the needs of employers. In this case, it is considered necessary to expand the education system by increasing the number of people receiving schooling and the years of schooling. Understandably, the governments of developing countries would focus their efforts on expanding schooling in when faced with under-education.
On the other hand, the general belief that “if you want to be successful, you have to be educated” persists regardless of the situation on the labor market side. The government and educational institutions are also not very sensitive to changes in the labor market demand. As a result, the education system continues to expand. People try to stay in school longer, even though the system is already producing enough educated people to meet the demand. This, in turn, leads to over-education—such as in many developed countries where there is a vertical mismatch between the labor market and education (Disjardins 2011; Green and McIntosh 2007). In emerging market economies (EMEs), the cause of the mismatch may not be well captured. It may go astray, as the policies that promote eliminating under-education end up causing over-education at some point.
In addition to these vertical inconsistencies, there is also horizontal inconsistency in which the knowledge and expertise of human resources do not match the demands of the labor market. Among university graduates, this horizontal inconsistency occurs when the employment rate is good in specific fields and majors but challenging in others. Parents and students themselves do not have much information on how the labor market demand will move in the future. They go to university with a vague idea of “I want to go to XX department and get a job in X” based on their acquaintances and their own experiences. However, in reality, the demand for human resources in a particular industry may already be heading in another direction. This is called information asymmetry between the labor market and job seekers. In the case of horizontal inconsistency, it is not practical for the government to try to adjust the number of students admitted to each department. This would lead to fluctuations in the number of students admitted to each department, which may hinder the autonomy of educational institutions.
Therefore, it is essential to conduct constant research and surveys to accurately capture changes in labor market demand and provide this information to eliminate information asymmetry so that job seekers can accurately judge the situation for themselves. At the same time, it is necessary to change educational programs, which tend to become rigid once established, into a system that can be flexibly adjusted to meet the ever-changing demands of the labor market. As I have mentioned here before, the mainstream discussion in recent years has focused on knowledge that can be used in society after graduation. In terms of enhancing the relevance of such knowledge, a mechanism to adjust horizontal inconsistencies is needed.
 Of course, many researchers have pointed out that the apparent fairness of the educational system actually favors children from families with high parental economic power and education levels, and that such families are often biased toward certain families and races (e.g., Bowles and Gintis 2002).
- Bowles, Samuel and Herbert Gintis (2002). The Inheritance of Inequality. Journal of Economic Perspectives, vol. 16, no. 3, pp. 3-30.
- Disjardins, Richard and Kjell Rubenson (2011). An Analysis of Skills Mismatch Using Direct Measures of Skills. OECD Education Working Paper No. 63. Paris: OECD.
- Green, Francis and Steven McIntosh (2009). Is there a genuine under-utilization of skills amongst the over-qualified? Applied Economics, vol. 39, no. 4, pp. 427-439.