Education and Unemployment Rate

Laura Tyson, my former dean at Haas School of Business, wrote an op-ed piece on NYT in which she argues for a second stimulus spending. Her arguments are inline with some of the discussions I've read from Paul Krugman and Joseph Stiglitz. These practicing Keynesian economists are all for government intervention. So that's not surprising.

What's kind of surprising is she would say things like worrying about deficits and the size of the government is focusing on the wrong things. Wrong things? She probably meant wrong focus.

The statistics she cited about education and unemployment rate is very interesting:

Consider how the unemployment rate varies by education level: it’s more than 14 percent for those without a high school degree, under 10 percent for those with one, only about 5 percent for those with a college degree and even lower for those with advanced degrees.

Education in the U.S. does help cushion workers against the general and severe downturn. This is consistent with the outsourcing movements over the last decades: low-paying jobs that require little or no education moved mostly to countries like India and China. What U.S. should do is indeed to make college education more prevailent among its population of over 300 millions. But that cannot be accomplished in a few months or a few years.

In contrast, college degrees in China may not mean high level of employment. I have not seen any good statistic, but casual observation suggests that family background and connection play a much more important role in landing a stable job, preferrably in government or state-own companies,  in China.

Brain is still valued a lot more in the U.S.