Why do Policies that Connect Education and Careers Go Astray?

Education, market, and employment classified using the concept of transaction costs

Abstract

This paper classifies human resources and transaction systems using the concept of transaction cost and considers a connection between education and careers. First, from the viewpoint of the size of the transaction cost, and the viewpoint of the comparison between market transaction and intra-organizational transaction, the human resources and the transaction systems were divided into “market model,” “command economy model,” “network model,” and the “internal labor market model.” Moreover giving consideration to these classifications, the changes related to the market and the employment system were classified into “individualization,” “marketization = shift to non-regular employment,” “increase in boundaryless careers,” and “increase in non-routine tasks.” By such classification, the following problems were considered: (1) the problem of communicating the market importance regardless of the distinction between “market models” and “network models divided from market transactions,” and (2) the problem of excessive idealizing of the “market model” and “command economy model” by underrating transaction costs. Specifically, the problematic points of higher education reform proposals promoting vocation-oriented education were examined and it was revealed that the vague competencies drawing the spotlight in “human resources of the network model” are stealthily being introduced into “human resources of the market model,” and these competencies, moreover, are being idealized as being observable and communicable in the market. The problem is that “low skilled human resources that are excluded from internal labor markets and yet have a high market transaction cost and cannot make or use the networks” that are produced by way of “marketization,” and the “increase in non-routine tasks,” are losing the opportunity of experiential learning. This paper proposes the “opportunity” for building networks within society as an increasing future role of higher education institutions.