Hello everybody! This article is little different from my previous articles. It has very little economics content in it. This is a question which is frequently asked. Should you bet on higher educational qualification or a better job experience.
In this confused world, we all are seeking answers to something or the other. But given the current career scenario, our generation is definitely yet struggling to find that perfect job. After my bachelor’s there were two set of people; one who took up job and one who took up master’s. After master’s again the game was repeated. Some took up job, some decided to study further. So how to decide the strategy between higher education vs job. Well I agree, one might say (without even thinking twice) ‘to be financially independent you need to take up the first job opportunity you receive’. I took up mine when I was 20. They used to pay me INR 2,500 per month. I used to work for an hour, one day a week. Along with that I was studying for my master’s entrance exams and some other exams.
Whether you should carry on with your education or take up a job? Well… seriously speaking nobody can ever answer that question for you! You need to first decide if you want to enter the corporate world, academic world, the glam world (theaters, you tube channels, small screen/big screen acting so on, so forth) or be an entrepreneur. Some jobs of the corporate world aren’t easy. I met this finance guy the other day. He was promised 35K per month (sounds good for a 21 year old?) but he was receiving only 10K. Now the catch which he missed was ‘even though he was in the finance department his work was to bring customers and he would receive the entire pay only if he completed his target’. So jobs are a bit tricky… pick yours carefully. If you have convincing power go for target oriented jobs. On the other hand an you-tuber (who might not be very educated) can earn more than a business tycoon. For the corporate sector; experience counts. For the academic sector; higher education is important. For the glam sector talent is needed. If you want to be an entrepreneur, start up capital, luck and market knowledge is crucial.
Let us now take a look at a model. The weak point of any model is that it works on assumptions. So, we are bound to take some assumptions here. We will assume our individual has achieved his bachelor’s degree and deciding if he should take up a job or pursue master’s degree. Assuming the bachelor’s degree is important because there are no decent jobs available for school pass outs. A master’s degree involves two years of commitment. Again, we are assuming that our individual representative is not earning (like part time or night shift employments) prior to completing his education. We will try to compare the opportunity cost between the two scenarios and come to an end result.
An employment opportunity means a salary. Let us assume the salary to be ‘x’ in the first year. We all know that every year there is a minimum hike of 10% in every job. This implies that next year our representative individual will earn additional 10% of x; i.e. 1.10x. In the third year there is an additional 10% hike. Hence, the salary should rise to 1.21x in the third year.
Now, if he takes up education he has to bear certain costs. Let, the tuition fee be ‘y’. Since master’s is a two year course, the total cost suffered will be ‘2y’. Now, after completing master’s degree an individual is only benefited if he can make up the for cost of two year education and still earn more. In other words, he should earn more than 1.21x plus two years tuition fee. Let us assume that after a masters he earns a salary of ‘z’ per anum.
I.e. he should go for masters only if 1.21x < z – 2y.
Truly speaking, nobody would ever sit and calculate to decide if he should study further or not. So, how to take a decision on this matter? I would say… go with the flow… If after Bachelor’s degree you feel you don’t want to indulge in books. Take up a job! May be after an year or so you will feel there is no career growth and hence you would be mentally ready to study again. Or it may so happen that experiences and company switches/shifts help you to land in your ideal career position without a master’s degree. However, one must never be scared to explore options and take career breaks. Rather I would say when ever confused, take a career break and enjoy the beautiful life. Who knows the break might help you to get a more clear vision about your career.