Thread by @JakeVigdor

If you started a Ph.D. program in economics this fall, your chances of proceeding directly to an academic job (excluding postdocs, but including non-tenure track positions such as lecturers) is approximately...

13%

Is that a market failure? That's our thread topic for today.

First, on the numbers. @NSF conducts a survey of earned doctorates each year, with very high response rates. Of 1,237 economics doctorate recipients in the US, 274 (22%) reported a first job at a US academic institution.

ncses.nsf.gov/pubs/nsf19301/…

7.4% of doctorate recipients accepted postdocs (that's up from 5% just 4 years prior).

26% reported "no definite commitment." That's down compared to 4 years ago, but the percent accepting academic non-postdoc jobs is also down (from 24%).

Our friends in sociology posted a 31% academic placement rate in the most recent (2017) data. But 39% reported "no definite commitment."

Physics/astronomy?
4.5% go to academic jobs other than postdocs
32% go to postdocs
38% "no definite commitment"

OK, so if you earn your Ph.D. you've got a 22% shot at an academic (but not necessarily tenure track) job. But not everyone who enters a doctoral program earns a degree.

According to Stock, Siegfried, and Finegan (2011), the 8-year completion rate is 59%. 0.59*0.22=0.13

Stock, Siegfried and Finegan studied entrants to 27 doctoral programs in fall 2002. The sample was skewed towards higher-ranked programs, and higher-ranked programs in the sample had higher completion rates. So the population proportion is probably lower than 59%.

Stock, Siegfried and Finegan also document a trend towards longer time-to-degree that has almost certainly continued.

I visited a top-ranked department last year that confirmed what I've heard elsewhere: 6 years to completion is the norm.

Why?

According to my informal research, it's not because dissertations are taking any longer to write. It's because "the market" expects more work, and more completed work. There's an arms race going on. The 6th year is effectively a one-year postdoc, albeit at half the salary.

Now, how should we think about this?

Rational, fully informed agents would in theory incorporate this information and only sign up for the degree if the expected value justifies it. In which case, no market failure.

But are agents rational and fully informed?

Where, in browsing the webpages of doctoral programs in economics, do we see statistics on attrition rates? Time to degree? Percent of entrants who land tenure-track jobs?

Are these not the things we'd advise our undergraduates, or our children, to think about?

One could argue that there are market failures beyond incomplete information in the market for graduate training in economics. There are government subsidies, for example.

That said, ought we not promote a best practice of ensuring our trainees are fully informed?

Good points by @jaredcrubin. Industry and government need talented economists, some of my best & happiest friends (and best compensated) have those jobs.
But what fraction of entering students aspire to those jobs?

I have no doubt that programs vary in student outcomes.
That’s why they should all publicly post data on them.

We should talk, too, about postdocs. Rapidly growing, now 25% of academic placements.
In theory these are time limited but mentored positions.
Problem is, based on my conversations with Econ postdocs, the mentoring can be slim to none.

And here’s a wonky one. Foreign grad students are eligible for OPT extensions to their student visas. In STEM fields, including something called “mathematical economics,” the extension is longer.
But not, curiously, if your diploma just says “economics.”
Cue the AEA lobbyists!