Overeducation in the UK

by on October 9, 2011 at 2:05 am in Economics, Education | Permalink

Chevalier and Lindley have a new paper:

During the early Nineties the proportion of UK graduates doubled over a very short period of time. This paper investigates the effect of the expansion on  early labour market attainment, focusing on over-education. We define  over-education by combining occupation codes and a self-reported measure for the  appropriateness of the match between qualification and the job. We therefore  define three groups of graduates: matched, apparently over-educated and  genuinely over-educated; to compare pre- and post-expansion cohorts of graduates. We find the proportion of over-educated graduates has doubled, even though over-education wage penalties have remained stable. This suggests that the labour market accommodated most of the large expansion of university graduates. Apparently over-educated graduates are mostly indistinguishable from matched graduates, while genuinely over-educated graduates principally lack non-academic skills such as management and leadership. Additionally, genuine over-education increases unemployment by three months but has no impact of the number of jobs held. Individual unobserved heterogeneity differs between the three groups of graduates but controlling for it, does not alter these conclusions.

For the pointer I thank Alan Mattich, a loyal MR reader.

James October 9, 2011 at 4:29 am

Someone should undertake a similar study for Finland, where the minimum qualification for a large number of white-collar jobs is a Masters

prior_approval October 9, 2011 at 7:23 am

‘Over-educated?’

Best satire site on the web.

CBBB October 9, 2011 at 12:15 pm

How is it satire? If you invest more in education then the market demands then you’re over educated – from an economic perspective any way.

prior_approval October 9, 2011 at 1:38 pm

Not everything is measured (nor measurable) in economic terms.

Which is just one of the reasons this is one of the best satire sites on the web.

CBBB October 9, 2011 at 2:00 pm

Well that’s true but education is expensive and the reality is most people who enroll in institutions of higher education have a substantial economic motive behind their decision and what we’re seeing more and more is that the education is not paying off in terms of better or higher paying jobs.

Edward Burke October 9, 2011 at 9:44 pm

Does over-education necessarily kill innovation and entrepreneurship, too? If so, maybe our new hordes of the over-educated unemployed and underemployed can help foment a new middle ages and become “the new goliards”. Their satiric songs and banter can take on some suitable extra-ecclesial institutions (universities themselves? banks? media conglomerates? science and technology leviathans?), and in another eight hundred years someone can set some of their works to suitable orchestration.

Andrew' October 10, 2011 at 7:47 am

Education has an ROI. It may not be entirely economically quantifiable, but that is the place to start, especially considering the enormous endowment effect which will skew non-numerical analysis.

Floccina October 10, 2011 at 12:06 pm

I think that over-educated is a poor phrase but over schooling works. I think that you would agree that if we all spent all our time and money in school that would be too much schooling, so the question in how much money and time spend in school is optimal.

Andrew' October 9, 2011 at 7:48 am

We often hear about early retirement to open jobs. How much of education is postponing entering the workforce to keep the overcrowding down?

Bill October 9, 2011 at 8:10 am

Good point. Fellowships, RAships, etc. are a form of academic unemployment insurance during a down economy. Too bad we will be cutting NIH.

Andrew' October 10, 2011 at 7:54 am

Unfortunately, I don’t think we have countercyclical education policy, which is one place it makes sense.

JWatts October 10, 2011 at 2:30 pm

I’d say in general the US has a defacto countercyclical education policy. When the economy is slow a larger number of students decide to get advanced degrees. I’m not sure more money would change the situation much. After all, these are, in general, well educated and smart students or they wouldn’t be in that position. The only guarantee for spending more money is a result of having spent more money.

julien October 9, 2011 at 8:16 am

I don’t think that one can give a static definition to education and its adequatness to a job. Jobs and technologies are changing also because people are able to adapt to them. Holding a master degree to be a farmer may be rational if you expect the job to be more relying no technology and management in the future ; which is likely to be.

CBBB October 9, 2011 at 2:21 pm

Right but how much time is devoted to actually teaching about specifically how to use new technologies in university programs? My degree was in Computer Science at a pretty respected school in that field and even there you don’t learn much at all about any specific programming language, operating system, or software package, a lot of the practical side of things you always have to learn on your own the university degree is just an expensive piece of paper certifying you went through some program and unfortunately it’s becoming more and more the be-all-end-all for employers even as most of them have big misconceptions of what people learn at school.

julien October 10, 2011 at 4:43 am

You shouldn’t just learn at the Uni, you’re supposed to be there to learn how to learn ! It’s all about methodolgies rather than recipes and capabilities rather than abilities. Overeducation is a short term definition of long-term growth.

Andrew' October 10, 2011 at 7:56 am

“you’re supposed to be there to learn how to learn”

Possibly true, but still a very convenient rationalization.

JWatts October 10, 2011 at 2:32 pm

If you don’t manage to learn ‘anything’, then you probably haven’t managed to ‘learn how to learn’. Personally, I have a little disdain for university Computer Science programs. The students we interview who took Computer Engineering always seem far more knowledgeable than the students who took Computer Science.

Niall Douglas October 9, 2011 at 9:05 am

As someone who studied in the UK, and holding two undergraduate degrees, two Masters degrees and am nearly finished an additional PGCert, I am definitely overeducated! However each of my qualifications is in a completely different field, I enjoyed each, and personally speaking I wouldn’t choose differently if I had to do it again.

However I am like catching cancer in the jobs market. Employers simply have zero interest because they can’t put me into an easy to fit box, especially as I live in Ireland where the jobs market is much worse than the UK and most of anyone with talent or qualifications has emigrated (me and my sister too next year actually). I appear to employers as someone who likes studying too much, and therefore get binned by HR before interview. It also doesn’t help that my grades have never been great – I’m a jack of all trades, master of none, and it shows.

I actually don’t mind underemployment too much, I’m always busy, but I know I am unusual in this. From a long term sustainability perspective, the current situation is stupid. Everyone has a degree – increasingly, everyone has a Masters degree. Anyone without a degree is apartheided out of any decent job, leaving running your own business as the sole option for achieving success and for a lot of the lads in the dole queues the most profitable and career building job available is selling drugs and organised crime. We’re basically dividing our most talented people into endless education and living at home and organised crime.

It does not take much to realise that the current system is totally unsustainable. It’s unsustainable even without primary energy supplies becoming constrained as they are right now. I think only very radical change can fix this, so I wrote a booklet on the matter which Tyler has very kindly agreed to look at.

Niall

CBBB October 9, 2011 at 12:20 pm

Yeah the current system is unsustainable because education at the higher level is mostly about signalling and the more people you crowd into universities the weaker the signal gets from the degree. So then everyone has to get masters degrees, and then PhDs and then….? While at the same time hardly ANY of the actual jobs out there require advanced skills on the job, the degree is just there to get you an interview. And of course if your grades aren’t fantastic then it’s pretty much over in terms of jobs,

Claudia Sahm October 9, 2011 at 3:46 pm

Who says whether a job “requires advanced skills”? Sure a company might be fine with someone with less education, but maybe they can tweak the job responsibilities to keep a more educated, bright, driven person from being bored so that person actually makes a bigger contribution to the company than expected. I would worry about the third group in the article (especially if financed by taxpayers)…this who appear to hide out in school so they don’t have to fact the world. And yet “over educated” would not be my first choice label for them.

CBBB October 9, 2011 at 4:38 pm

What do you mean tweak? I’m not talking about some job doing project management, software development, financial analysis, etc. but on a lower level then what was studied in school, I’m talking about the reality of the job market for many recent graduates: McDonalds, Walmart, Home Depot, Construction work, essentially the same career options as a high school drop out.

Niall Douglas October 10, 2011 at 7:05 am

BEFORE the 2008 recession (these are my own calculations from official data), 45% of UK and 51% of US under 25s were unemployed, economically inactive or in low skilled temporary employment. Just 22% (US) and 31% (UK) had jobs with some job security. There aren’t definitive figures, but the indications suggest that the “average” age of reaching 50% job security within your cohort was 28 or 29 years old.

After the recession this has likely pushed out a lot, maybe to 31 years old, and it will almost certainly keep going later and later. Here’s the question: how does an economy make sense when its youngest third and oldest third are economically dependent on the middle third?

It brings back memories of the second century AD in the Roman Empire: ever increasing numbers dependent on dole and pensions, and ever fewer working. Inflation got going too, the price of grain from Egypt rose dramatically, as did the price of tin, and paradoxically given the masses of the underemployed there was a shortage of labour willing to work either in the fields or the mines.

Sound familiar?

Niall

Storage Letchworth October 9, 2011 at 11:45 am

Part of the issue is to do with who are these students. Many of them are the young people that formerly would have left school at 16 -18 to find employment. When jobs became more scarce for that age band, the government concerned with the politically unappetising fact of rising unemployment figures, chose to push these young people into ‘further education’. The ultimate short term fix. A few short years later they appeared on the unemployment statistics but now as ‘over educated’.

At October 9, 2011 at 7:06 pm

Seems to me that the problem is too many people and not enough jobs.

Automation has removed huge numbers of jobs, and is removing more. When I started working we had a keypunch pool, a typing pool, messenger boys and filing clerks. None of those jobs exist anymore.

In the 1930s depression an infrastructure project could absorb hundreds of men with few skills, now you need a fraction of that and they have to have the ability to handle the machinery.

Even if everyone had a suitable education (not just an education) there wouldn’t be enough jobs. Seems to me the only solution is a nice big antibiotic resistant worldwide plague that is fatal to those over about 40 so say 30% of them die, and sterilises say 10% of the under 30s.

CBBB October 9, 2011 at 7:51 pm

Yeah THAT’S the only solution – typical MR commenter always going with the most extreme fringe option. Productivity has increased greatly over the last few decades and the problem faced now is not a lack wealth but a problem of distribution – too much wealth is in the hands of a tiny group of people who, realistically made a lot of it through rent-seeking behavior not real contributions to society. It is probably time to start decoupling income from employment. Perhaps a bit of a fringe view but I think a million times more reasonable then hoping for the death of 30% of people over 40.

john malpas October 9, 2011 at 8:44 pm

What is a ‘real contribution to society’ CBBB?

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