As regular readers know, I have long been interested in graduate over-education – graduates who have jobs that typically require lesser qualifications. Using ABS definitions of jobs that normally require university education or equivalent experience, about three-quarters of graduates are appropriately matched with their jobs and about a quarter are over-educated.
However the significance of this has always been open to interpretation, given that some degrees are not taken for vocational reasons, some people may be happy with their jobs, or the situation could be temporary. And we would always expect some level of mismatch so it is hard to know what the benchmark figure for ‘too high’ should be.
A recent study by Kostas Mavromaras and colleagues, using HILDA data, looks at this issue in more depth. It uses a different definition of over-education, that the person has more education than the modal level of education in their job. Among full-time employees, they find 13% over-education among graduates – about half the ABS figure (though to what extent this is due to excluding part-timers, and what extent due to classifying FT jobs differently, I can’t say).
The study adds a subjective measure of over-skilling – people disagreeing with the proposition that ‘I use many of my skills and abilities in my current job’. Only 5% of full-time graduate workers are over-educated and over-skilled. So there are graduates who on paper look over-qualified, but believe that they are matched with their jobs, skills-wise. This may be because their degree did not give them skills, or the job uses more skills than are apparent from a general classification.
For males, there are wage penalties relative to well-matched people only for men who are both over-educated and over-skilled. For females, there are wage penalties across all categories, but these are highest for women who are both over-educated and over-skilled.
For both sexes, over-education on its own has only limited effects on job satisfaction. But being over-skilled, or over-skilled and over-educated, does have negative effects
Over-education may, from a human capital perspective, signal inefficient public and private investment in higher education. But for the individuals involved, subjective measures of over-skilling are more reliable indicators of whether or not there is a problem.