Educational expansion and the partial devaluation of credentials

Negative effects of educational expansion on occupational returns in Spain by education levels and fields of study

Luis Ortiz, Professor of Political and Social Sciences
Jorge Rodríguez Menés, Professor of Political and Social Sciences,
Universitat Pompeu Fabra

Has there been a decline in occupational returns associated with educational credentials during the expansion of education that began in Spain in the 1960s? This study uses the concept of the positional value11 of educational credentials to explore this possibility. The positional value of a credential is defined by the percentage of individuals that enter the labour market each year with at least that same level of education. The higher this percentage, the lower is the positional value of the credential.

In our research we use the European Union Labour Force Survey (EULFS) to reconstruct the educational and occupational trajectories of Spanish cohorts that entered the labour market during the key period of educational expansion, when primary and secondary education was universalized and access to tertiary education became more widespread.

Our analysis of these trajectories shows that the increase in the percentage of credentials has in effect been associated with a loss in their occupational returns. This loss was greater in the humanities and social sciences, particularly in regards to university degrees. In applied or technical studies, the loss was lower and, in the case of technical university degrees, there has been no loss, probably because such degrees transmit more information about the qualifications of their holders.

1. Introduction

The expansion of the education system can be conceived as an increase of the collective effort a society dedicates to education (measured, for example, in percentage of GDP) or simply as the increase in the percentage of individuals that access higher levels of education. In this study we follow the latter, more common, definition (Haim and Shavit, 2013). The expansion in education experienced in many OECD countries since the 1960s generated growing opportunities for social mobility for disadvantaged populations. Although they do not include Spain, the conclusions of recent international studies on social mobility (Breen et al, 2009; Breen et al, 2004) are encouraging regarding the effects of expansion on equality in educational achievement by social origin; that is, on the growing opportunity that the child of a manual worker has of obtaining a university degree in comparison with the child of someone in the liberal professions. Breen et al (2009) concluded that the relative opportunities of one or the other are not completely equal, but that educational expansion has clearly reduced differences.

However, the increase in equality in educational opportunities by social origin may not have had a totally positive effect on social mobility if education has become a positional good; in other words, a good that increasingly depends on the place that certifications occupy in relation to others within a hierarchy. In such a case, by multiplying higher education credentials, they lose a part of their value depending on their location within the educational hierarchy, and social origin could acquire a new effect over occupational returns. It may be that we see the importance of contacts (social capital) or parents' cultural level (cultural capital) return, for example, at the time of a job interview.

In what follows, we will examine whether such concerns have an empirical basis in Spain. The Spanish case is important because there are few other countries that have made such notable efforts expanding education in recent decades. Spain has gone from an illiteracy rate of 50.1% in 1960 to one of 2.5% in 2004, and from an average of approximately 3 years of education among the population over 15 years of age in 1960 to more than 10 years in 2010 (see graph 1).

2. Educational credentials: intrinsec value, positional value and occupational returns

To examine the concerns we have formulated, we consider two possible values for educational credentials. On the one hand, there is an absolute or intrinsec value: the diploma of a lathe operator confers on the holder the skill necessary to operate a lathe; in the same manner, a doctor or lawyer acquires a specific capacity to carry out the tasks required of their respective jobs. On the other hand, there is a positional value, which depends on how limited certain credentials are in the labour market that are based on the same education level or a higher one. Thus, for example, university degrees would not have the same value if they accounted for 5% or 25% of the total of credentials generated by the education system. With some notable exceptions (Ultee, 1980), positional value and its consequences have not been considered in analyses of social stratification and mobility until very recently (van de Werfhorst, 2011; Bol, 2015).

There are different ways of conceiving the relationship between positional value and the occupational return that educational qualifications guarantee. Human capital theory argues that education has only the intrinsec value we have mentioned: the increase in the percentage of individuals with high levels of education should not imply any disadvantage in terms of the work that those who possess the corresponding educational credentials aspire to.

The theory of credentialism, in contrast, considers it possible that there has been a process of inflating credentials. Individuals do not only acquire human capital for the purpose of gaining skills to carry out concrete occupational tasks, but also to benefit from the rewards that members of the select club of the most highly educated enjoy. This club would no longer be as select if there were more persons holding intermediate and higher level credentials. Individuals would then look to distinguish themselves with further investments in human capital that would result in an inflation of credentials and their consequential devaluation.

Educational expansion in Spain has decreased the value of educational credentials, which is revealed in lower occupational results for university graduates.

According to a variation of the theory of credentialism, the effect of the positional value of education on occupational returns is not the same for all types of education. Iannelli and Raffe (2007) formulated two hypotheses in this regard. The hypothesis of low academic performance postulates that vocational or technical education can be more easily stigmatised (and its results more devalued, especially in secondary education) because individuals access said studies with lower academic results than those who follow a general education path.  In contrast, according to the hypothesis of the diffuse signal, general education can be more vulnerable to an eventual devaluation of credentials because it does not reflect the competencies it confers as well.  The increasing access of individuals to higher levels of education means that the heterogeneity of capacities and skills (and, therefore, of potential productivity) becomes greater. This can be particularly negative for general education credentials, as they are more difficult to evaluate for employers than technical or applied credentials (Klein, 2011; Ganzeboom and Luijkx, 2004). 

3. Data and methods

To test which of these hypotheses fits reality better, we use data from the European Union Labour Force Survey (EULFS) for the years 2003 and 2004. For these years information is available on education levels and field of studies, as well as the date educational credentials were obtained by participants in the survey. This information makes it possible to precisely reconstruct the trend in the distribution of educational credentials by level of studies for the last decades of the 20th century and the first years of the 21st century in Spain2.

Graph 1 illustrates the expansion of education in Spain and that of several other European countries since the 1960s. As can be seen, Spain is the country where the average in years of education for the population over 15 years of age grew the most from 1960 to 2010 (from the lowest to the second highest average). A significant part of this expansion took place in the university system, which grew from 33 to 70 universities in a relatively short period of time (1982-2004) (Cebolla-Boado and others: 93).

To measure occupational returns of educational qualifications, we look at the scores on the ISEI scale given to the last jobs3 held by survey participants after graduating. The ISEI scale (Ganzeboom and others, 1992) is an international indicator of proven validity that ranks occuptions by, among other factors, their level of prestige and pay, both fundamental aspects of what is referred to as socioeconomic status.

In contrast to general studies, technical certifications have maintained their occupational returns, probably because they transmit more information about their holders' qualifications.

The principal objective of our analysis is to estimate the extent to which socioeconomic status is a consequence of the value that an educational credential has, in the two senses discussed previously. To measure the intrinsec and absolute values of educational credentials, we look at four education levels, which correspond to the highest credentials reached by those interviewed: basic secondary education or less (ISCEDO to ISCED2), upper secondary (ISCED3), post-secondary and advanced vocational training (ISCED4 and ISCED5B), and university education (ISCED5A). To measure the positional or relative value of these credentials we look at the percentage of individuals with at least the same level of education as those interviewed in the year in which they left formal education. The higher this percentage, the lower is the positional value of the corresponding education credential.

In addition, we have considered three major fields of study: the first covers studies of a more general character (humanities, social sciences, education, teacher training and services); the second, a good part of technical and scientific studies, including computer sciences, sciences and mathematics; lastly, a third category covers the health sciences.

To reveal the net effect these two values of certifications have on occupational returns, we carried out a multivariate analysis taking into account individual factors (gender, ethnic origin, length of employment, experience/time in the labour market and economic sector of activity) as well as contextual ones (unemployment rate when entering labour market and successive educational reforms that, in general, lengthened the duration of studies) that may also have affected occupational returns. Regarding the contextual factors, we place each respondent in one of nine homogeneous periods in terms of the time when they entered the labour market. 

4. Decline in positional value and occupational returns

Graph 2 shows the annual percentage of individuals that entered the Spanish labour market with at least one of the three highest levels of education considered in the study4. The graph reflects the same overall trend seen in graph 1 for Spain, but with greater detail, disaggregating the data by levels. The expansion of education logically brought with it an increase in intermediate and higher education certifications, although particularly notable is the increase in upper secondary education. Note that this percentage increase is a reverse reflection of the lose in positional value for each level.

Changes in occupational results for the four education levels analysed between 1960 and 2004, measured by the average socioeconomic status of the occupations holders of educational certifications access for each education level in those years, reveal a slight decline for all the levels, but especially for upper secondary education and university (graph 3). This decline, parallel to the decline in positional value provoked by the expansion of education reflected in graph 2, is an initial indicator of a possible devaluation of educational credentials, understood as the loss of capacity to guarantee to graduates of the education system access to the same jobs as those who graduated before them.

It remains to be seen if the relationship between the loss in positional value and the loss in occupational results that can be seen in graphs 2 and 3 hides the effect of any of the individual variables (gender, ethnic origin, etc.) or contextual variables (time periods) that we referred to above. In addition to confirming that education level is associated with occupational results, the multivariate analysis (coefficients not shown here) reveals a significant statistical association between the loss of positional values of educational credentials and the decline in occupational results they generate. This supports the argument that the expansion of education has caused a devaluation of educational credentials.

For the period from 1965 to 2009, graph 4 shows the changes in occupational results for the credentials granted for the three major fields of study as a consequence of a loss in their positional value, for each education level and controlling for other factors. Values above zero indicate that occupational results improved with the increase in credentials at each level; values below zero indicate that they worsened.

As can be seen, regarding certifications for the three higher levels, an increase of 1% in the percentage of persons with at least the same level of education as the respondent had a small but significant effect on occupational results for the holders of these certifications.

However, this loss was not the same for all the levels nor all types of education. For general studies (the blue line in graph 4), the effect was systematically greater than for technical studies, including the health sciences. In addition, the loss of occupational results for general education was greater at higher education levels, perhaps because, as the hypothesis of "low academic results" argues, in intermediate education levels the employment prospects for holders of the corresponding certifications were not affected by the poor academic performance of persons in those fields, as would have occurred, for example, in vocational training. Thus, at the intermediate level, the advantage of technical education over general education would be less.

It would be useful to examine whether the devaluation of educational credentials has affected students' from lower social origins more, reversing the social advances made from the extension of the right to an education.

In contrast to the trend found for general studies, we see a remarkable immunity to a loss in positional value for certifications in technical-scientific studies, which were barely affected by the greater access of the population to these qualifications or to other higher ones (green line). The advantage in comparison to general studies is particularly noticeable at the level of university education, possibly because technical studies transmit a much clearer signal of the competencies of those holding such qualifications. This interpretation is more plausible if we neutralize, via consideration of the economic sector and period of entry into the labour market, the effect that cyclical variations in the demand for persons with technical qualifications can have on the occupational results of these certifications.

Regarding the results for the health sciences, there is no reason to think that the competencies indicated by a degree in medicine could be less precise than those indicated by a certification in any other technical career. However, the decline in occupational results in terms of a loss in the  positional value of these certifications was significant at the level of university education.

There are two possible explanations for this: One is an institutional explanation specific to the Spanish case. In Spain, certain occupations, historically associated with the liberal professions, managed to impose strong regulations restricting access, for example, through the obligatory use of professional training that can only carried out through examinations (such is the case of medical residents who want to acquire a specialization). This has had a positive effect on the occupational results for particular university degrees. However, if the regulation of access to these professions were stricter than the regulation of access to university studies, this could have produced bottlenecks and a subsequent decline in occupational results with respect to other technical studies. Certain journalistic accounts and some academic evidence point in this direction in the Spanish case (Casquero and others, 2007).

An alternative to this institutional explanation is that the results we have found could be due to the fact that the data source chosen (EUFLS) combines strictly health-related studies (medicine, nursing) with others that are more related to social services (social work), which fit better with the general studies profile considered here.

5. Conclusions and implications

Is the massive access of the Spanish population to intermediate and higher education related to the devaluation of educational credentials, that is, to losses in their socioeconomic prestige in the labour market? None of the theoretical relations between positional value and the occupational results of an occupation that we have considered have been clearly corroborated by our results. Regarding technical studies, only intrinsic value seems to be important, in line with what human capital theory argues.  In contrast, positional value has been shown to be relevant for more general studies and for studies in the health field, as expected by the theory of credentialism. In both cases, there was a loss of socioeconomic prestige in Spain between 1960 and 2004, which is proportional to the loss in positional value of university degrees in general studies as well as in credentials from secondary education.

This loss fits with a certain decline in the results from educational certifications currently being discussed, and which diverse international bodies have warned about (see here, here and here). For the year 2005 (one year after the period analysed here), the following graph shows the importance of unemployment and underemployment among the population with a tertiary education from 15 to 64 years of age. As can be seen, Spain is one of the countries with the highest percentage of persons with tertiary education without work or with work that does not correspond to their education level (underemployment). Although other countries have also undergone a similar expansion of education, they have not suffered the same levels of underemployment or over-education, so that this phenomenon must, to a certain extent, be attributed to the high rate of temporary employment in the Spanish labour market, which fosters growth in low-productivity sectors and does not create a favourable climate for investment in human capital (Felgueroso and others, 2015).

Regarding social mobility, our findings raise the question of whether the loss in the occupational results of education is evenly distributed by social origin. If it is not, the devaluation of higher education credentials may have strengthened the impact of social origin on social inequalities, assisting certain holders of credentials (those from higher social classes, with greater cultural and social capital) to extract greater occupational results from their educational credentials than others.

Our findings also have practical implications. More open access to higher education levels does not by itself seem to have guaranteed greater equality of opportunities to rise in the social hierarchy, especially for those with more general educational qualifications. To increase the effective equality of opportunities, redistributive policies that make it possible for good students from more disadvantaged backgrounds to compete in equal conditions with their peers must be combined with policies based on improving the information students have regarding the employment outcomes of the certifications they seek and the design of more effective systems to assist students in choosing more profitable educational itineraries.

 

[1] The positional value of an educational level decreases to the extent that the percentage of individuals that enter the labour market with that level increases. The higher that percentage is, the lower is the positional value of the educational credential.

[2] As we will see, the trend in educational expansion has not changed since 2004. The use of data from those years is a question of convenience, but also of a desire to control for the effects of economic cycles, given that the current one has still not ended.

[3] It would make more sense to look at the scores on the ISEI for the first jobs held by respondents after graduating, but this information is not available in the surveys analysed. However, a recent analysis by Bukody and Robert (2007) shows that the correlation between first job and last is high. We have also found this to be the case with data from the 2006 CIS survey on Class and Social Structure (Ortiz and Rodriguez, 2015). 

[4] Primary level does not appear in the graph because, logically, the percentage of persons entering the labour market with at least this level of education remained constant (100%) during  this period.

 

Luis Ortiz, Associate Professor, Dept. of Political and Social Sciences

Jorge Rodríguez Menés, Associate Professor, Dept. of Political and Social Sciences

Universitat Pompeu Fabra, Barcelona

6. References

BARRO, R and LEE, J.W., (2013) 'A new data set of educational attainment in the world, 1950–2010'Journal of Development Economics 104: 184-198.

BOL, T. (2015) ‘Has education become more positional? Educational expansion and labour market outcomes, 1985-2007’, Acta Sociologica, 58: 105-120.

BREEN, R. (ed.) (2004) Social Mobility in Europe. Oxford: Oxford University Press

BREEN, R., LUIJKX, R., MÜLLER, W. and POLLAK, R. (2009) ‘Nonpersistent Inequality in Educational Attainment: Evidence from Eight European Countries’, American Journal of Sociology, 114(5): pages. 1475-1521.

BUKODI,E., and RÓBERT,P. (2007) Occupational Mobility in Europe. Dublin: European Foundation for the Improvement of Living and Working Conditions.

CEBOLLA-BOADO, H., RADL, J. and SALÁZAR, L. (2014) ‘Aprendizaje y ciclo vital. La desigualdad de oportunidades desde la educación preescolar hasta la edad adulta’. Barcelona: Fundación La Caixa (Colección Estudios Sociales, Nº 39)

CASQUERO TOMÁS, A.,GARCÍA CRESPO, D. and NAVARRO GÓMEZ, Mª L. (2007) ‘Inserción laboral y especialización educativa en España’, XVI Jornadas de la Asociación de Economía de la Educación.

FELGUEROSO, F., HIDALGO-PÉREZ, M. and JIMÉNEZ-MARTÍN, S. (2015) ‘The Puzzling Fall of the Wage Skill Premium in Spain’, The Manchester School,doi: 10.1111/manc.12116

GANZEBOOM, H., DE GRAAF, P. and TREIMAN, D. (1992) ‘A standard international socio-economic index of occupational status’, Social Science Research, 21(1): 1-56

HAIM, E.B. and SHAVIT, Y. (2013) ‘Expansion and Inequality of Educational Opportunity: A Comparative Study’, Research in Social Stratification and Mobility, 31: 22-31

IANELLI, C. and RAFFE, D. (2007) ‘Vocational upper-secondary education and the transition from school’, European Sociological Review, 23: 49-63.

KLEIN, M. (2011) ‘Trends in the Association between Educational Attainment and Class Destinations in West Germany: Looking inside the Service Class’, Research in Social Stratification and Mobility 29(4): pags.427-444

MÜLLER, W. and WOLBERS, M. (2003) ‘Educational attainment in the European Union: recent trends in qualification patterns’, in Walter MÜLLER and Markus GANGL (eds.) Transitions from Education to Work in Europe. Oxford: Oxford University Press, cap.2 (pags.23-62).

ORTIZ, L. and RODRIGUEZ MENÉS, J. (2015) ‘The Positional Value of Education and its Effect on General and Technical Fields of Education’, European Sociological Review, 24: pags.1-12.

ULTEE, W. (1980) ‘Is Education a Positional Good?: An Empirical examination of alternative hypotheses on the connection between education and occupational levels’, Netherlands Journal of Social Sciences, 16: 135-153.

VAN DE WERFHORST, H. (2011) ‘Skills, positional goods or social closure? The role of education across structural-institutional setttings’, Journal of Education and Work, 24: 521-548.

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Luis Ortiz, Professor of Political and Social Sciences
Jorge Rodríguez Menés, Professor of Political and Social Sciences,
Universitat Pompeu Fabra

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