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Overeducation and the skills of UK graduates

  • Arnaud Chevalier
  • Joanne Lindley

During the early 1990s the proportion of a cohort entering higher education in the UK doubled over a short period of time. The paper investigates the effect of the expansion on graduates' early labour market attainment, focusing on overeducation. We define overeducation 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 overeducated and genuinely overeducated. This measure is well correlated with alternative definitions of overeducation. Comparing pre- and post-expansion cohorts of graduates, we find with this measure that the proportion of overeducated graduates has doubled, even though overeducation wage penalties have remained stable. We do not find that type of institution affects the probability of genuine overeducation. Apparently overeducated graduates are mostly indistinguishable from matched graduates, whereas genuinely overeducated graduates principally lack non-academic skills and suffer a large wage penalty. Individual unobserved heterogeneity differs between the three groups of graduates but controlling for it does not alter these conclusions. Copyright (c) 2009 Royal Statistical Society.

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Article provided by Royal Statistical Society in its journal Journal of the Royal Statistical Society: Series A (Statistics in Society).

Volume (Year): 172 (2009)
Issue (Month): 2 ()
Pages: 307-337

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Handle: RePEc:bla:jorssa:v:172:y:2009:i:2:p:307-337
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  1. P. J. Sloane & H. Battu & P. T. Seaman, 1999. "Overeducation, undereducation and the British labour market," Applied Economics, Taylor & Francis Journals, vol. 31(11), pages 1437-1453.
  2. H. Battu & C. R. Belfield & P. J. Sloane, 1999. "Overeducation Among Graduates: a cohort view," Education Economics, Taylor & Francis Journals, vol. 7(1), pages 21-38.
  3. Arnaud Chevalier, 2003. "Measuring Over-education," Economica, London School of Economics and Political Science, vol. 70(279), pages 509-531, 08.
  4. Dolton, Peter & Vignoles, Anna, 2000. "The incidence and effects of overeducation in the U.K. graduate labour market," Economics of Education Review, Elsevier, vol. 19(2), pages 179-198, April.
  5. Dearden, Lorraine, et al, 2002. "The Returns to Academic and Vocational Qualifications in Britain," Bulletin of Economic Research, Wiley Blackwell, vol. 54(3), pages 249-74, July.
  6. Francis Green & Steven McIntosh, 2007. "Is there a genuine under-utilization of skills amongst the over-qualified?," Applied Economics, Taylor & Francis Journals, vol. 39(4), pages 427-439.
  7. Bauer, Thomas K., 2002. "Educational mismatch and wages: a panel analysis," Economics of Education Review, Elsevier, vol. 21(3), pages 221-229, June.
  8. Allen, Jim & van der Velden, Rolf, 2001. "Educational Mismatches versus Skill Mismatches: Effects on Wages, Job Satisfaction, and On-the-Job Search," Oxford Economic Papers, Oxford University Press, vol. 53(3), pages 434-52, July.
  9. H. Battu & C.R. Belfield & P.J. Sloane, 2000. "How Well Can We Measure Graduate Over- Education and Its Effects?," National Institute Economic Review, National Institute of Economic and Social Research, vol. 171(1), pages 82-93, January.
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