The increasing unemployment among graduates (seen in the graphic below) raises the question of how to offer an efficient supply of public superior education. Assuming, for a question of simplification, that we are dealing with a closed economy, what should be the number of superior courses provided/supported by the public sector? Makes sense that the state only provides the number of superior education degrees correspondent to the number of graduated workers needed by the country. Knowing that there is a need for both skilled and unskilled work in each country; is it not an inefficient cost to have all workers being educated to the point of superior education?
It can be argued that education is not only a matter of increasing production but also a matter of increasing well-fare. Nevertheless we are not discussing basic nor even secondary education. Does it really increase well-fare to study such a number of years to then end up working an unskilled, badly paid job?
The number of openings for each area in public superior education should then be the result of an approximated estimative (leaving a margin of error: some extra students) of the number of workers that will be needed in that area by the time the course ends. This could reduce (increase in some cases) the costs of the state with superior education to a more efficient value.
It could be argued that having the number of skilled workers leaving college matching the number needed by the market could give the workers too much bargaining power over their salaries. But private education could balance this, without overloading the state with this cost. Moreover, private education means that people could still educate themselves to the point they wish.
If people are selected to go to college based on high school classifications and exams, then the more talented candidates would get in, enhancing the possibility of using the course as a signal. This system would also mean extra effort from high-school students and would allow the universities to raise the level of difficulty of their courses, also contributing to the use of this degree as a signal to the work marketplace.
What about with open economies such as ours? Even with open economies, people with superior education that cannot find a suitable job can emigrate. Still, it is not cost efficient to provide superior education at a reduced cost, for people that will end up not working inside the country. Although, in this case, having superior education available for everyone assures better quality of life for everyone. This results in a discussion between equity and efficiency.
Source: OECD Indicators Education at a Glance, 2011.