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Signal failure

Bhattacharya, A., & Percy, C. (2021). Signal failure: How can we get more value and less waste from our education system?. The Social Market Foundation. London, UK.


Recently, the issue of signalling in higher education has been subject of academic attention, with its scope and extent being both acknowledged and contested. Academic signalling is a situation when an institution may not provide students with significant practical or theoretical skills, and the qualification obtained is primarily used to demonstrate, or “signal” their pre-existing traits for gaining better employment opportunities. Coupled with increasing numbers of graduates and lowering wage premiums, higher education qualifications are becoming a precondition to access the labour market, while in some cases providing a limited increase in productivity on the job.

Through an extensive literature review, the authors claim that signalling is responsible for up to 40% of the wage benefit of education, probably more in higher education than earlier stages or courses focused on basic skills. The issue with signalling is that the national investments in education may be used to merely give students qualifications, rather than skills to improve their effectiveness. The authors also acknowledge that investing in human capital is a priority, but with measures ensuring students are learning useful or applicable skills in their studies.

The paper explores several possible avenues to alleviate the problem of signalling, such as identifying risk factors and steering students away from paths which are more likely to lead to signalling. Furthermore, the authors also advise policymakers to make it easier for institutions to compare qualifications, while exploring alternative assessment methods that may focus more on productivity. They also acknowledge a lack of understanding of the deeper mechanisms of signalling, and the necessity for more research in this area.

You can read the full paper here.