(Entry by Andrés
Bernasconi)
PROPHE Summary:
Challenging conventional wisdom, a study by researchers at the University
of Chile and Chile's Central Bank shows there are no significant earning
differences between graduates of traditional universities, such as
the University of Chile, and those from the leading new private institutions.
The researchers analyzed earnings obtained in the second
and fifth year after completion of studies, of graduates of two cohorts
(1995 and 1998) in the six most popular study programs in Chile (Accounting,
Law, Business Administration, Psychology, Pre-school Education, and
Journalism). For purposes of comparison, schools were assembled in
groups which varied from one another in their central or provincial
location, their juridical status, and the time of their establishment.
The study also showed that two other factors are much
more important than private-public type of university in determining
earning levels. Area of study is roughly twice as important as the
nature of the university granting the degree. Earning differentials
by study area reach 600% between the most and the least profitable:
Geology (mining is the most important component of Chile's economy)
and Pre-school Education, respectively. Secondly, earnings bonuses
to graduates of universities in the metropolitan region of Santiago
and adjacent coastal area of Valparaiso are also high, compared to
earnings levels of graduates from provincial universities.
Variance of earnings among graduates of the same program
and university is, nonetheless, very high, which suggests that personal
attributes different from school of attendance do play an important
role.
According to the authors, the comparison between earnings
at the second year and at the fifth year after graduation provides
some evidence for the hypothesis of a signalling effect based on the
school's reputation, inasmuch as the earnings premium obtained by
graduates of the most prestigious schools tends to wear off by the
time their reach the fifth year after graduation.
The study is available at http://www.bcentral.cl/eng/stdpub/studies/workingpaper/pdf/dtbc306.pdf,
July 2005.
PROPHE Observation:
In higher education, prestige is partially a function of age. It is
not unusual, then, that the group of private universities whose graduates
perform closer to their colleagues from older universities is composed
of the private universities created earliest after the reforms of
the early eighties. The rest of the privates, founded a few years
later, fared al levels significantly below the other two groups.
Yet, the fact that graduates of the older private
universities can access the labor market in more or less the same
footing than their colleagues from the public and most traditional
universities is a breakthrough for the whole of the private system,
in that it erodes the stereotype of private institutions and their
graduates as inherently second class.
In highlighting the differences in the performance
of distinct clusters within the public and private sectors, the study
also confirms the within-sector heterogeneity that has evolved in
the Chilean system, as in others around the globe. In this regard,
it is very telling that whether the university is private or public
comes out in only fourth place in terms of its influence in earnings,
after study program field, metropolitan or provincial location, and
individual attributes of the graduate. Of course, other countries
may show much more striking public or private advantages than Chile
does.
A final point on the source of the data used to produce
this study. Good quality information for consumers is vital in market
systems. Chile's strongly market-coordinated higher education has
been striving for some time to improve the amount and quality of the
information available for students and other stakeholders. Data on
the professional labor markets is a very important part of any public
information policy aimed at higher education users, and with this
in mind, the government funded the development of a website, run by
scholars, whose mission is to provide information on earnings (based
on tax returns) and other elements of the labor market for different
professions. The site can be viewed at www.futurolaboral.cl.
