Key Takeaways
- Economists question the value of degrees as credentials increase and wage premiums decrease.
- Historically, a university degree reliably signaled competence, but that power has eroded due to mass production of degrees.
- Employers now face an over-supply of graduates, leading to hiring mismatches and frustrations for job seekers.
- Elite institutions retain brand prestige, but most degrees may not effectively signal skills anymore.
- A shift towards proof-based hiring methods is emerging, though its broader adoption remains uncertain.
As credentials multiply and the wage premium erodes, economists are asking whether the university degree has quietly lost its power to sort the capable from the crowd.
For most of the twentieth century, a university degree was the single most reliable passport to the middle class. It signaled to employers not just knowledge, but diligence, capability, and a certain tolerance for structured effort. In a world where few people held them, degrees were scarce enough to mean something unmistakable.
That world is gone. And the consequences, according to Professor Josse Roussel, an economist who studies labor markets and human capital, are only beginning to ripple through the global economy.
“The premium is still real and substantial — but it’s not as big as it used to be. And it has been declining since 2010.” — Prof. Josse Roussel
Speaking on the latest episode of The Curiosity Exchange, Roussel traced the arc of what he calls the “massification” of degree production. From the late 1970s through the 2010s, the wage premium earned by college graduates over high-school graduates grew steadily and substantially. But roughly from the Great Recession onward, that gap has been narrowing. The degree has not stopped paying — it still does — but it pays less than it once promised, and it no longer functions as the rare, credible signal it once was.
“When you had few graduates, a degree was a powerful filter,” Roussel explained. “Today, an employer recruiting at graduate level has a pool of candidates that simply did not exist two generations ago. And paradoxically, that abundance creates a perverse outcome: companies hire over-qualified graduates for roles that do not require graduate skills, the skills atrophy, and the graduate is left frustrated.”
The implications extend well beyond individual frustration. If degrees no longer reliably signal competence — because they are too common, or because the institutions granting them vary too wildly in quality — then the entire architecture of hiring built on academic credentials begins to look unstable. Roussel stops short of predicting collapse. Elite institutions, he argues, retain something degrees from lesser-known schools have lost: brand prestige powerful enough to function as its own signal. An Ivy League diploma still sorts candidates with near-algorithmic efficiency, not because it guarantees skills, but because its scarcity is structurally enforced.
But for the vast majority of degree-holders, that branding logic offers cold comfort. What fills the vacuum? Roussel points to a shift — still nascent, not yet decisive — toward proof-based hiring: portfolios, demonstrated outputs, verified skill certifications, and work-sample assessments that bypass transcripts entirely. In fields from software engineering to data science, this transition is already well underway. Whether it can scale across the broader labor market remains the open question.
“We’re going to go beyond degrees. They won’t vanish overnight — but there will be other ways of measuring what someone actually knows how to do.” — Prof. Josse Roussel
What accelerates this reckoning, Roussel suggested, may not be a quiet structural drift but the next major economic shock. A financial crisis, he noted, has a way of exposing mismatches that calm periods paper over. When the next recession arrives and graduate unemployment rises again — as it did in 2009 and 2010 — the mismatch between credential and competence will likely become impossible to ignore.
For now, degrees persist. The system that produces them is vast, politically entrenched, and woven into how nations understand meritocracy. But the monopoly is cracking, and the conversation Roussel is part of — about what credibility looks like in a world of abundant credentials and rapid skill obsolescence — may be the most consequential one in education today.
Full Conversation on YouTube · Are Degrees Losing Their Value? — Prof. Josse Roussel on The Curiosity Exchange Watch the complete interview · subscribe for weekly episodes
