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Should governments of OECD countries worry about graduate underemployment?


  • Francis Green
  • Golo Henseke


To assess potential public concerns, this paper examines theory and evidence surrounding graduate educational underemployment (overeducation) in this era of mass higher education. Using a new, validated, index of graduate jobs, we find that the prevalence of graduate underemployment across 21 countries is correlated with the aggregate supply–demand imbalance, but not with indicators of labour market flexibility. Underemployment’s association with lower job satisfaction and pay is widespread. Yet in most countries there are external benefits (social trust, volunteering, and political efficacy) associated with higher education, even for those who are underemployed. Taken together with existing studies we find that, in this era of mass higher education participation, under-employment is a useful indicator of the extent of macroeconomic disequilibrium in the graduate labour market. We conclude that governments should monitor graduate underemployment, but that higher education policy should be based on social returns and should recall higher education’s wider purposes.

Suggested Citation

  • Francis Green & Golo Henseke, 2016. "Should governments of OECD countries worry about graduate underemployment?," Oxford Review of Economic Policy, Oxford University Press, vol. 32(4), pages 514-537.
  • Handle: RePEc:oup:oxford:v:32:y:2016:i:4:p:514-537.

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    Cited by:

    1. Jan Baran, 2019. "Is expansion of overeducation cohort-driven? Evidence from Poland," Working Papers 2019-13, Faculty of Economic Sciences, University of Warsaw.
    2. Ian W. Li & Mark Harris & Peter J. Sloane, 2018. "Vertical, Horizontal and Residual Skills Mismatch in the Australian Graduate Labour Market," The Economic Record, The Economic Society of Australia, vol. 94(306), pages 301-315, September.
    3. Zehra Bilgen SUSANLI, 2017. "Underemployment in the Turkish Labor Market," Sosyoekonomi Journal, Sosyoekonomi Society, issue 25(33).
    4. Denise Jackson, 2020. "Accounting and Finance Graduate Employment Outcomes: Underemployment, Self‐employment and Managing Diversity," Australian Accounting Review, CPA Australia, vol. 30(3), pages 193-205, September.
    5. Fregin, Marie-Christine & Bijlsma, Ineke & van der Velden, Rolf, 2018. "Much ado about social outcomes?," Research Memorandum 017, Maastricht University, Graduate School of Business and Economics (GSBE).
    6. Golo Henseke, 2019. "Against the Grain? Assessing Graduate Labour Market Trends in Germany Through a Task-Based Indicator of Graduate Jobs," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 141(2), pages 809-840, January.
    7. Martin, John P., 2018. "Skills for the 21st Century: Findings and Policy Lessons from the OECD Survey of Adult Skills," IZA Policy Papers 138, Institute of Labor Economics (IZA).
    8. Anneleen Vandeplas & Anna Thum-Thysen, 2019. "Skills Mismatch and Productivity in the EU," European Economy - Discussion Papers 2015 - 100, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
    9. Vlad I. RO?CA & Oana-Lorena ?EPOSU, 2018. "The Influence of Education on Subjective Underemployment: Research on Multinational Corporations in Romania," REVISTA DE MANAGEMENT COMPARAT INTERNATIONAL/REVIEW OF INTERNATIONAL COMPARATIVE MANAGEMENT, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 19(4), pages 328-340, October.
    10. Marius-Cristian Pană & Mina Fanea-Ivanovici, 2019. "Institutional Arrangements and Overeducation: Challenges for Sustainable Growth. Evidence from the Romanian Labour Market," Sustainability, MDPI, Open Access Journal, vol. 11(22), pages 1-19, November.
    11. Jesus Felipe & Yasuyuki Sawada & Gemma Estrada & Donna Faye Bajaro, 2020. "Why do Filipinos desire to work more hours?," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 34(2), pages 106-132, November.

    More about this item


    higher education; overeducation; mismatch; wages; skills; social returns;
    All these keywords.

    JEL classification:

    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J4 - Labor and Demographic Economics - - Particular Labor Markets


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