Graduate ‘over-education’ a ‘legitimate concern’, argues paper

CGHE working paper suggests that governments should implement intervention policies on the ‘demand side of the labour market’

June 22, 2016
'Job skills' key on PC keyboard

Governments should implement policies to alter the demand for highly educated workers, in order to tackle the problem of graduate “over-education”, according to a recent working paper from the Centre for Global Higher Education (CGHE).

The paper, “Should governments of OECD countries worry about graduate over-education”, argues that over-education is a “legitimate concern” and “especially prominent in and following an era of higher education massification”.

The authors Francis Green, professor of work and education economics, and Golo Henseke, research officer in the Centre for Learning and Life Chances in Knowledge Economies and Societies, both at the UCL Institute of Education, said that they reject the “sanguine view” from economists and government policymakers that “it is sufficient to monitor the average rate of return to higher education”.

They added that policy initiatives to reduce over-education tend to focus on an assumed lack of employability skills among graduates, implying that only less capable graduates are in less skills-demanding jobs.

Instead, Professor Green and Dr Henseke suggest that as governments are neither willing nor able to curtail the growth of university participation, they should implement intervention policies on the “demand side of the labour market”.

The paper, which measures the extent and impact of graduate over-education for 21 countries in the Organisation for Economic Cooperation and Development (OECD), found that Finland had the lowest proportion of over-educated graduates (11 per cent), while Japan had the highest (49 per cent).

In general, the Nordic countries are positioned at the lower end of the spectrum (with the exception of Denmark), while English-speaking countries, including the UK, Republic of Ireland, US and Canada, are at the opposite end.

Proportion of over-educated graduates in OECD countries

Proportion of over-educated graduates in OECD countries
Centre for Global Higher Education

Note: The adjusted proportions were predicted by assuming that mismatched graduates were endowed with the average skill levels of matched graduates

“Over-education” was measured as the proportion of university graduates aged between 25 and 65 years in a non-graduate job.

The paper notes that the only factor accounting for the variation of over-education in the countries is the aggregate proportion of graduate jobs relative to graduate labour supply.

The research also found that in general there is a pay benefit for being a graduate in a non-graduate job, compared with a non-graduate in the same job. However, university graduates in non-graduate jobs in Cyprus, Finland, Germany and Italy do not receive any “pay advantages” over those who had completed secondary education, it found.

The paper concludes that it is important not to translate concern about over-education “automatically into an argument against higher education”, adding that these anxieties should be counterbalanced by “renewed commitment to the purposes and non-production benefits” of universities, and a “contestation of the widespread tendency to orient education and training narrowly and exclusively to the purposes of employment”.

A later version of the paper is due to be published in the Oxford Review of Economic Policy in the autumn.

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