Human capital or signalling, unpacking the graduate premium

Asher Rospigliosi, Susan Greener, Tom Bourner, Maura Sheehan

Research output: Contribution to journalArticlepeer-review

Abstract

Purpose: We revisit the debate on the contribution of Higher Education (HE) to the economy which has been dominated by human capital theory and signalling theory. Human capital theory contends that HE contributes by adding to the potential productivity of graduate employees. Signalling theory, asserts that HE contributes by enabling employers to differentiate potentially productive graduate employees. Design/methodology/approach: We use recent advances in our understanding of the graduate employability to reassess the two theories. Most graduate job vacancies are open to graduates of any subject and the key to employment in such jobs appears to be the graduate propensity to learn in employment. Findings: HE both increases students' propensity to learn in employment and signals to employers that graduates are people with a high propensity to learn in employment. Practical implications: Our conclusion is that for the four key stakeholder groups, the economic value of a university education can best be explained with the concept of 'graduate propensity to learn'. Social implications: Employers, Government, existing students and potential students and universities benefit from the propensity to learn, which is the most important economic outcome of a university education. Originality/value: We challenge the perceived choice between human capital and signalling theories as a false dichotomy as HE both develops students' powers of learning in employment and also signals this to employers.
Original languageEnglish
Pages (from-to)420-432
Number of pages13
JournalInternational Journal of Social Economics
Volume41
Issue number5
DOIs
Publication statusPublished - 1 Jan 2014

Bibliographical note

This article is © Emerald Group Publishing and permission has been granted for this version to appear here http://eprints.brighton.ac.uk/12741. Emerald does not grant permission for this article to be further copied/distributed or hosted elsewhere without the express permission from Emerald Group Publishing Limited.

Keywords

  • Education
  • Human capital
  • Labour
  • Signalling
  • Graduate employment
  • Graduate unemployability

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