Monday, May 20, 2013

Federal Reserve: "There is growing concern that college graduates are increasingly underemployed"

Jaison R. Abel and Richard Deitz at the New York Federal Reserve write:
Although the unemployment rate of workers with a college degree has remained well below average since the Great Recession, there is growing concern that college graduates are increasingly underemployed—that is, working in a job that does not require a college degree or the skills acquired through their chosen field of study
They then conclude:
   Theoretical research in urban economics suggests that the large and thick local labor markets found in big cities can increase the likelihood of job matching and improve the quality of these matches. These benefits arise because big cities have more job openings and offer a wider variety of job opportunities that can potentially fit the skills of different workers. In addition, a larger and thicker local labor market makes it easier and less costly for workers to search for jobs.[...]Given the expense of college and the potential difficulty faced by graduates in finding a job that utilizes the skills obtained through higher education, improving the chances of finding a good job is clearly important. Our work suggests that living in a big city can help.
This is not rocket science theory, but it is accurate. Coming out of the Fed, that in itself is unusual. But bottom line: If you are a college grad, who can't find a job, head to the big city. For those of you who haven't yet decided to go to college, it may make sense to take James Altucher's advice, skip college and just travel.

Altucher's advice sure worked for David Karp. Forget skipping college, Karp dropped out of high school. At 17, Karp dropped out of Bronx High School of Science and decided to live in Japan. He eventually headed back to the US, founded Tumblr and just sold it to Yahoo for $1.1 billion.

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