The range is defined as being one standard deviation above and below the mean level of educational attainment. In this article, using the Annual Population Survey (APS), we broadly follow a statistical method used by the International Labour Organisation (ILO) to compare the distribution of educational attainment of those in employment in the UK against the average educational attainment level for their occupation.Įach individual is assigned a status based on whether their own level of education falls within or outside of the range for their particular occupation and age group. Second, we take wages as our measure of productivity, hence this article does not analyse the impact of overeducation on productivity measured in terms of output per worker or hour worked or total factor productivity. This distinction can be important if highly educated workers are employed in low-level jobs because they only possess low skills, despite their level of education. First, we assume that education is a measure of workers’ abilities, hence we do not directly distinguish between overeducation and over-skilling.

Two main assumptions underlie our analysis. What is the relationship between overeducation and wages? Do results for women and men differ?Īre younger (recent) overeducated graduates earning lower wages, compared to older (non-recent) overeducated graduates? What is the incidence and persistence of overeducation for graduates (with first degree or equivalent) by type of degree subject? What is the incidence of overeducation in the UK labour market by sex, age and region? Our study aims to answer the following research questions: The cost of investing in tertiary education and uncertainties related to future job opportunities, make this extension particularly relevant. We also present a detailed analysis by type of first degree and status of younger graduates. Our article starts with a detailed evaluation of the extent of overeducation in the UK, accounting for age, gender, and regional differences. McGowan and Andrews (2015) find a similar negative relationship at the industry level, for a large sample of Organisation for Economic Co-operation and Development (OECD) countries. At the firm level, there is some evidence to suggest that overeducation is associated with lower productivity (McGuinness, 2006 Green, 2016). Existing evidence shows that overeducated workers are likely to earn lower returns relative to similarly educated individuals whose jobs match their education (Hartog, 2000 Green and Henseke, 2016). In this case overeducation could be a more long-term phenomenon.Īt the individual level the relationship between overeducation and productivity is often captured through its impact on wages. Employers may prefer hiring graduates as this is likely to reduce training costs, while less educated workers may become unemployed. Overeducation may also arise in the context of labour market distortions if the supply of graduates exceeds the demand and crowds out job opportunities for the less educated. Some peoples’ education will exceed requirements and they will be overeducated (underemployed), others will be in the opposite situation. In other words, and according to dynamic labour markets view there will always be some degree of mismatch between education achievement and job requirements due to incomplete information which prevents efficient matches between educated workers and employees. Both the human capital and career mobility explanations perceive overeducation as a temporary situation, which is likely to cease once the worker has gained sufficient experience.Īn alternative explanation for the existence of overeducation, put forward by the dynamic labour market view, relates to the presence of information asymmetries which may cause search frictions.

This explanation is consistent with the career mobility argument, whereby individuals may forgo higher wages in the early stage of their careers, only to experience upward income mobility later in their careers. This means that workers may substitute education for the lack of previous work experience, accepting jobs requiring less education than they possess, until they acquire further experience. The existence of overeducation has been explained by drawing emphasis on the role of human capital.

It can also be seen as a form of underemployment, hence contributing to the extent of labour market slack. Overeducation is a form of resource underutilisation, which may have implications for the individual, firm and the economy. Overeducation is a form of mismatch where a person can be overeducated if they possess more education than required for the job. This article examines overeducation in the UK labour market using Annual Population Survey (APS), for 2006 to 2017.

Female models who has a degree