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What is the Learning Effect?

Mary McMahon
By
Updated May 16, 2024
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The learning effect is an increase in productivity and wages for people who attend colleges and universities. Economists theorize that going to college can substantially increase a person's lifetime earnings, offsetting the investment necessary to pay for college and the costs of living while in school. A related theory, the screening effect, suggests that employers find college graduates more impressive and are consequently more likely to hire them and pay them well, thus contributing to the higher earnings for college graduates.

Substantial documentation illustrates that people who attend colleges and universities make more, on average, than people who do not. Higher levels of educational attainment translate into even more money made over a lifetime. This supports the claims made by advocates of the learning effect. Attending college for an associate or bachelor's degree can allow people to access more job opportunities, and many high school students are encouraged to so with the goal of making them more successful in life.

According to the theories behind the learning effect, people who go to college will be more productive in the long term. They often pick up productivity skills in college along with useful skills they can apply to employment in a wide variety of sectors. College encourages working independently, prioritizing time responsibly, and organizing tasks in a productive and efficient way. People will carry this with them into employment, potentially making them more valuable as employees. Higher degrees also tend to attract higher wages, especially in the case of professional qualifications like medical and legal training.

Advocates of the screening effect argue that college makes people more employable because they are more appealing applicants. Rather than operating through learning and experience in college like the learning effect, it takes effect when people are applying for jobs. Employers will choose a college graduate over someone with a high school degree, and will gravitate towards people with advanced degrees if they have a choice. These economists suggest employer screening of employees explains the better compensation and productivity levels people associate with college graduates.

A mixture of both screening and learning effect probably comes into play in most situations. The earning differential between college and high school graduates varies around the world, but can be striking. College graduates also tend to be more likely to access jobs with benefits like retirement accounts, health care, and paid vacation. In addition to making more money, they are in a better position for retirement and have more opportunities while at work, including employer-funded continuing education and chances to travel and network with other people in their industries.

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Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a SmartCapitalMind researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Discussion Comments

By irontoenail — On Jun 01, 2014

@bythewell - I don't think everyone should get a degree. But I also think that a degree is worth something. Even one of the arts degrees that people make fun of. It doesn't surprise me that someone who was able to complete a full degree should earn more than someone who didn't (on average anyway).

By bythewell — On May 31, 2014

@Iluviaporos - The problem with that is that when you are applying for that job as a car salesman, you are going to be up against three other candidates with business or marketing degrees, because so many people get degrees these days.

It's got to the point where it's not just a matter of making more money. In a lot of positions, you simply can't break in anymore without a degree.

Which is actually ridiculous, because a lot of these positions don't require a degree of any kind. It's just that, when your resume crosses someone's desk and there are a pile of others in front of it, you have to be competitive. So if they've all got degrees, you have to make sure you do as well.

I wouldn't be surprised if the learning effect was stronger than ever, even though it's got more to do with initially getting the job, in my opinion, than in excelling in it.

By lluviaporos — On May 31, 2014

This might be true for many people, but it doesn't mean that it will be true for you. Remember that they are including all the accountants and lawyers and doctors in these averages. Of course a person who goes to university and becomes a doctor is going to earn more than someone who didn't. But it's not necessarily true that a person who goes to university and studies a generic science degree will earn more than someone who gets out of high school and starts work as a car salesman.

Don't rely on these kinds of statistics to make up your mind for you.

Mary McMahon

Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

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