Economics
Credential Inflation and the Devaluation of University Degrees
Quick fact
Employers now routinely ask for bachelor's degrees for jobs that previously required only a high school diploma—a phenomenon called 'degree inflation'—while the value of a degree in terms of lifetime earnings has actually decreased for recent graduates in many countries.
Why this is interesting
That degree that guaranteed a job in your parents' time—why does it still take a decade to pay off today? It's not just the economy; the degree itself may be losing its power.
Read the full explanation
Understanding Credential Inflation and the Devaluation of University Degrees
Think of degree as a ticket to a good job. If everyone has the same ticket, it's no longer special. Credential inflation is that process: as more people obtain a degree, the degree no longer distinguishes you from the crowd. So employers start using it as a basic filter, not a mark of excellence. In your parents' generation, a high school diploma was enough for many middle-class jobs; now those same jobs require a bachelor's, sometimes even a master's. This is not because the work got inherently more complex, but because the sheer volume of degree-holders has flooded the pool. So you have to get even more education to stand out—a master's, a PhD, a certificate—just to land the same entry-level position. This is the 'educational arms race' where everyone runs faster just to stay in place.
A deeper explanation
The underlying mechanism is Spence's signaling theory: education acts as a signal of underlying productivity, not necessarily a source of it. When the number of degree-holders increases, the signal becomes less discriminating—it can no longer separate high-ability from low-ability workers. Employers respond by raising the credential bar, sometimes arbitrarily, to filter applicants. This creates a feedback loop: the more people respond by getting degrees, the more the value of each degree falls. Formally, the value of a degree is not absolute; it's positional—relative to what others have. This is why we see overeducation, where workers are employed in jobs that don't require their level of education, and a declining wage premium for new graduates. The meaning of 'a degree' has changed from a rare marker of elite competence to a baseline expectation, and its economic value has been diluted.