Labour market mismatch among UK graduates: An analysis using REFLEX data

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu There is much disagreement in the literature over the extent to which graduates are mismatched in the labour market and the reasons for this. In this paper we utilise the Flexible Professional in the Knowledge Society (REFLEX) data set to cast light on these issues, based on data for UK graduates. REFLEX examines the labour market status of graduates five years after graduation and distinguishes between first and current job, vertical and horizontal mismatch, over/underqualification and over/underskilling as well as including a range of questions on the nature of work organisation and individual competences. We find substantial pay penalties for over-education for both sexes and for overskilling in the case of men only. When both education and skill mismatch variables are included together in the model only overskilling reduces job satisfaction consistently for both sexes. Using job attributes data it appears that the lower wages of the overqualified may in part simply represent a compensating wage differential for positive job attributes, while for men at least there are real costs to being overskilled. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SJEL Classification: J24, J31

Determinants of regional differences in rates of overeducation in Europe

“…At the individual level, overeducated workers have been found to earn less than similarly educated workers whose jobs match their qualifications, presumably because a proportion of their investment in education is underutilized and unproductive (McGuinness and Sloane, 2011;Mavromaras et al , 2009;Bárcena-Martín et al, 2012) 1 .…”

“…To date, research to identify the determinants of international differences in rates of overeducation has been limited. Thus, while we know much about the magnitude of overeducation effects on variables such as earnings, job satisfaction and career mobility (Battu, Belfield and Sloane (1999) and Dolton and Vignoles (2000), Peiró et al (2010), McGuinness (2003), McGuinness and Sloane (2011)), there is much less understanding of the structural factors that drive the overeducation phenomenon itself. With respect to the very limited work that does exist, Groot and van den Brink (2000), in a meta-analysis, found evidence of a relationship between overeducation and the rate of labour force growth.…”

“…In competitive markets wages should adjust in a way that discourages workers from training in areas where there are surplus skills (and lower returns) thus, helping to create a better balance between labour demand and labour supply. Furthermore, McGuinness and Sloane (2011) argue that, for many, overeducation is the product of a conscious trade-off job match between higher wages with other aspects of employment such as job security and an enhanced work-life balance.…”

Educational Mismatch and Firm Productivity: Do Skills, Technology and Uncertainty Matter?

“…Other studies, some of which control for workers' fixed unobserved heterogeneity and/or field of education, also found that over-(under-)educated workers earn more (less) than their adequately educated peers. This implies, according to human capital theory, that over-(under-)education increases (decreases) workers' productivity (see e.g., Battu et al 1999;Dolton and Silles 2008;Duncan and Hoffman 1981;McGuinness and Sloane 2011;Sicherman 1991;Van der Meer 2006).…”

The impact of educational mismatch on firm productivity: Evidence from linked panel data

“…Other studies regarding the wage effects of educational mismatch also highlight that, in a given job with a specific level of required education, over-(under-) educated workers earn more (less) than those who have just the required education for the job (Battu et al, 1999, Dolton and Vignoles, 2000, Duncan and Hoffman, 1981, Groot, 1996, Groot and Maassen van den Brink, 2000, Sicherman, 1991, van der Meer, 2006. Although part of this premium (penalty) may be explained by workers' unobserved heterogeneity (Bauer, 2002, Chevalier, 2003, Dolton and Silles, 2008, Frenette, 2004, Lamo and Messina, 2010, McGuinness, 2003, McGuinness and Sloane, 2011, current evidence on the basis of human capital theory thus suggests that over-(under-) education increases (reduces) workers' productivity. 2 Another strand of the literature examines the impact of educational mismatch on job satisfaction and other correlates of workers' productivity (such as absenteeism, shirking, turnover or training).…”