Too much self-interested choice?

David Labaree makes a strong case, albeit one built on circumstantial evidence, that the American education system has gone off the rails. In particular, rampant competition in schools motivated by potential private economic gain has led to a neglect of the public interest component of schooling and increasing stratification.

This argument has its greatest appeal if schooling is purely a signaling or selection device instead of something that changes individual skills. The signaling model says that schools simply perform a sorting activity, arraying people on the basis of skills before entering schools. In its starkest form, since schools do not really add anything to individual skills, the schooling serves no social value in terms of economic outcomes. In such a case, we might hope that schools played a large “public role,” socializing all students and developing more of a societal view of the culture and expectations of the nation. And, if some people found that they were placed into schools with specializations that they did not want, there would be no overall economic costs even if there was some redistribution across individuals.

But my reading of the evidence is that schools are not simple screening devices. While some relatively small part of their operations might do that, the vast majority of their work is changing the skills of people. These changed skills are valuable in the labor market, implying that incentives are created to make some specific schooling investments.  Moreover, it is hardly surprising that many students respond by seeking occupations and industries that reward higher skills.