Rising trend of over-qualification

Overqualification, job dissatisfaction, and increasing dispersion in the returns to graduate education
Francis Green and Yu Zhuy
Oxford Economic Papers 62 (2010), 740–763

“Several new findings have been reported about the returns to graduate education.  Over a 14-year period from 1992, there has been a substantial growth in the proportion of graduates who are overqualified for their jobs. Moreover, successive age cohorts entering employment have been experiencing greater overqualification. Among women graduates a large rise in the incidence of overqualification, from 23% to 32%, took place between 2001 and 2006.

The growth in overqualification has mainly been in the form of ‘Formal
Overqualification’, wherein employees report that they are in below-graduate
level jobs but nevertheless do not report that they are underutilizing their skills.
By 2006, this group comprised 23% of graduates. On average this group suffered an hourly pay penalty in 2006 of 0.32 log points (men) or 0.41 log points (women).

By contrast, there has been little or no growth in the proportions of those who report that they are both overqualified and underutilizing their skills: this latter group (Real Overqualification) still comprised less than one in ten graduates in 2006. The distinction between types is relevant because employees in the Real
Overqualification group experienced greater, and more sharply rising, pay penalties than those in the Formal Overqualification group. By 2006 the estimated hourly pay penalty in the Real Overqualified Group amounted to 0.62 log points (men) or 0.64 log points (women); and the members of this group were much less satisfied with their jobs than matched graduates. Real Overqualification is also associated with substantially greater job dissatisfaction than Formal Overqualification. Taking the above trends together it can be concluded that, whether because of the increasing  prevalence or because of the increasing costs for each employee, the impact of  overqualification of both types would appear to be increasing over the period.”

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