Compensating differentials, field of study and the Quebec student strike

Only something like 35% of Quebec students are on strike*, and in a column in today's La Presse, Yves Boivert notes that those on strike are overwhelmingly from the arts and social sciences faculties; those in natural sciences, engineering, medicine, etc have all stayed in class and their session is ending normally. His argument is that since people in the arts and social sciences cannot expect the sort of salaries that students in other faculties will likely get, the tuition increase hurts them more, so it is to be expected that they will be more likely to object.

My first reaction was: "Okay, that makes sense."

My second reaction was: "Hold it, what about compensating differentials?" Increased salaries are only one form in which the returns to education are realised, and it's one that is a relatively recent addition. For centuries, people had been studying philosophy, history and literature for their own sake. Students would take all forms of returns into account when choosing their fields of study, and those at the margin between electrical engineering and English literature would view the combinations of the two sorts of returns as equally balanced in each discipline. Increasing the cost shouldn't change anything.

A complication is that the high-earning programs usually have limited enrollment, so applying marginal analysis here may be problematic.

What do you think?

*For non-Canadians: The Quebec government decided last year to increase tuition fees in Quebec by 75% over 5 years, to a level just under the Canadian average. A student strike has been in progress for 11 weeks or so.

Comments

[Bob Smith]

"nothing stops a student from taking advantage of subsidized education in Quebec, then moving to another province"

True, and that's a compelling argument against "free" tuition. My Bay Street colleagues who did their law degree at McGill quite enjoyed the discounted tuition they paid, for all the good it did Quebequers.

In Canada, at least, that probably precludes governments from recovering tuition fees with a special tax on graduates, since provinces won't be able to impose that tax on graduates who move to other provinces. That wouldn't be an issue, though, if you set up as a system of loans with repayment or relief tied to income. Student loans owed to the Quebec government (or anyone else) are enforceable regardless of where you live. And if you set it up as a system whereby the government provides assistance to graduates based on income (so you get conventional student loans, but if you have low income, the government pays a portion of them, or pays the interest, or forgives them) they could certainly limit that assistance to people who are residents in Quebec.

[genauer]

Determinant,

you would make a great anglo economist.

Of course Austerity is working, just not instantenous and without pain. But nobody ever claimed that.
It is just a Krugman / deLong straw man.

Please take a look at Goldman Sachs www.irisheconomy.ie/GSGEP195.pdf
I ll gave you that link already. How often did cutting expenses work ? And how often raising taxes ?

That the US is an unique position, because of its size, does not mean that small European nations have the choice to ignore the fears of their creditors.

Interest rates are high, because they are risky, because of their behavior, to stop overspending only when threatened with immediate insolvency, as always. This is the bad experience of the last 20 years, that they have not changed in the GIPSIs.

In all these countries the government continued long term systematic overspending until they were forced into IMF programs, and especially the habitual criminal Greek government continued 1.5 years into that.

Absolutely all countries, but Swiss and Germans, have been there before, that is why we have the "no bail out", "no money printing" clauses in the Maastricht treaty. Paul Krugman knows that, he does not argue for discussing treaty changes, the crime promoter just constantly agitates for just breaking it.

The Marshall Plan was a one-time 5% GDP !!

liquidity injection (http://en.wikipedia.org/wiki/Marshall_Plan), everybody else got more per capita, mostly more than 2 times more, especially Greece. Do you have a link somewhere, detailing the Canadian contributions, you claim ?

That got the German machine running again, in 1953 it was clear how much could be extracted out of Germnay, and we got the London Treaty detailing our payments with the vast bulk paid in the 50ties and 60ties We were able to operate again and generating trade surplus to pay back our creditors, flawlessly.

On all those payments you get it somewhat 50 % wrong on a much more complicated story, but I think nobody here wants to go through many pages of details, timelines numbers etc. The only thing "Keynes" about that is http://en.wikipedia.org/wiki/The_Economic_Consequences_of_the_Peace
who warned already Summer 1919, that the horrendous Versailles Treaty will just lead to the next war,
and was somewhat successful to prohibit the same nonsense after WWII. But there was a Morgenthau Plan.

BTW, the british didnt pay their WWI debt to the US either, and had some weird little loan from that time ending on 10/3/2010 : -)

The economically relevant part of the payments was all done until 1975 !.
This is very typical of Anglo folks, just snapping up a few key words and then mangling a story together, which has little to do with the real situation, just like Krugman.

Greece has got from Europe 20 more Marshall plans over the last 30 years. We thought, this would work. Now they cheated their private creditors on another 100 % of GDP. This is a bottomless pit.


The http://en.wikipedia.org/wiki/Agreement_on_German_External_Debts did work, because it was payable, and provided a clear limitation to any more claims. Or so we thought. Now criminal people, like certain Greek parties, try to blackmail us again on that.

Interests rates rose for countries like Italy, Spain, not because their debt is unpayable, but because for a long time their governments / unions /etc. just didnt do anything to get back to a balanced path, and creditors lost faith. Why can a country like Italy not limit retirement age conditions, the US decided on in 1983 and Germany in 2003 ?

I follow CDS and interest rates very closely, and you can really each time, they announce somethig, see the effects. Berlusconi promises retirement reforn, rates go down a little bit, apparently with the help of the ECB. Berlusconi reneges on the promises made 2 days earlier, rates go up. etc. etc.
(Not to blame people still in power)

[genauer]

Bob, so your tuition system is, like it is, because of the Canadian tax / social security system,
just as in Australia and Germany that is also the real side condition.
In the end the overall results, after taxes and many years, look similar to me.

When I saw today morning
http://www.marketwatch.com/story/quebecs-long-costly-student-strike-drags-on-2012-05-03?pagenumber=2

I had to smile.
I did say earlier here, who cares about a student strike. Silly me.

[Determinant]

The http://en.wikipedia.org/wiki/Agreement_on_German_External_Debts did work, because it was payable, and provided a clear limitation to any more claims. Or so we thought. Now criminal people, like certain Greek parties, try to blackmail us again on that.

Reduction of debt recognizing the ability of the debtor to pay? Sound familiar?

1980, and it became irrelevant because Germany outgrew them. That debt consisted of the principal of certain bonds used to finance reparations in the 1930's and the general foreign debt of the Weimar Republic.

The interest was not payable until final German reunification.

Britain is still owed more by other countries that it owes to other countries, per a parliamentary question .

http://news.bbc.co.uk/2/hi/uk_news/magazine/4757181.stm

BTW, the british didnt pay their WWI debt to the US either, and had some weird little loan from that time ending on 10/3/2010 : -)

That was the termination date of the final German WWI reparations, those obligations which became payable after the Two Plus Four Treaty, the Treaty of Final Settlement with Respect to Germany, in 1990.

Britain and the United States have held off collecting on WWI debts since 1934 because the problem was insoluble. Germany benefited from multiple rounds of reduction and debt rescheduling while other countries didn't.

[genauer]

determinant, what do you want to say with your last post ?

[Determinant]

That your argument in your previous was disproved by the facts.

[genauer]

which argument ?

[Jacques René Giguère]

Today, at the annnual Association des Économistes Québécois convention, long technical discussion about university tuition fees. And most everyone agrreing that most of the ruckus is not about fees per se but about the young's fears for the future and that everybody is sick and tired of Jean Charest.

[Jacques René Giguère]

..and that the Minister of Education accepting campaign contributions from a Mafia chief is a weak starting point to argue about the "rule of law"...