Overqualification and unemployment in young people. Pathways to employment of university graduates

María Ramos, Post-doctoral researcher at the Carlos III University of Madrid

1. Educational expansion and overqualification in Spain

In recent decades in Spain the major educational expansion that has taken place has not been accompanied by equivalent growth in the demand for qualified workers in the jobs market. Specifically, the increase in the number of higher qualifications as a result of this educational expansion has been constant, and greater than the increase in demand for people to fill highly qualified positions.

As seen in graph 1, halfway through the 1990s there were barely 3 million people with a higher qualification (university degrees or advanced Vocational Training qualifications) and a very similar amount of posts for those with higher qualifications (i.e., for non-manual white-collar workers in management occupations, scientific and intellectual professions and support technicians, the three main groups in the international standard classifications of occupations (ISCO-88 and ISCO-08). However, according to the Active Population Survey (EPA), in September 2016 there were nearly 11 million holders of higher qualifications and barely 6 million positions to match these qualification levels: 10,932,500 people with qualifications for 5,922,600 jobs.

Due to the mismatch between the high increase in the number of university graduates and the lower increase in demand for qualified workers, overqualification has been becoming increasingly patent. Indeed, in comparison with other countries, the percentage of overqualified workers in Spain is quite high: it stands at around 20%. Although the figure varies according to age and years of work experience (Alba, 1993; Quintini 2011a, 2011b) and, slightly, according to the definition or source of data used, it has been confirmed that one in five people have a higher qualification level than would be necessary to correctly perform their job functions.

Although the aggregated figures of workers with a qualification level higher than that required for their post are significant, these percentages only give a partial idea of the problem of the educational mismatch, and there are at least three reasons explaining this. First, because they are based on estimates made at a specific moment in time and for the average of workers, and this snapshot does not allow identification of possible changes in the risk of overqualification over the course of the working lives of workers. Therefore, it cannot be known whether it is the same workers who remain in this situation for a long time or whether overqualification occurs fundamentally in the initial phases of working careers. Second, because the usual overqualification measurements do not take into account unemployment since, by definition, they are calculated by taking account solely of those who work. However, it is evident that among those who want to work and cannot there is also a waste of qualifications and, therefore, an educational mismatch that it is worth considering. And thirdly, because an aggregated overqualification figure says nothing about the different risk of educational mismatch for those holding qualifications in different disciplines, i.e., regarding the heterogeneity of qualifications in the risk of overqualification.

One out of every five workers has an education level higher than would be necessary to correctly perform their work and young people face the highest risk of being overqualified.

The aim of this text is to look in depth at educational mismatches taking into account these three considerations. For that reason, firstly it analyses their evolution in the initial phases of working life; secondly, it takes into account overqualification together with unemployment; and finally, it analyses the educational mismatch for people with qualifications in different disciplines. The analyses are based on the Survey on Labour Market Integration of University Graduates, produced by the INE (Spanish Statistics Institute), which compiles information on over 30,000 university graduates who graduated during the academic year 2009-2010. The field work was carried out 4 years after they graduated and gathered information not only relating to the qualification studied, but also on occupational integration straight after leaving university and 4 years later. 

2. Overqualification in the initial phases of working life

In all countries, young people are the group of workers facing the greatest risk of being overqualified. To explain this regularity, part of the specialised literature argues that overqualification is a transitory phenomenon. In other words, when entering the jobs market people lack work experience and, consequently, it is more common for them to accept jobs for which they are overqualified, but as they acquire experience the incidence of overqualification is reduced (Sicherman, 1991). However, the evidence for some countries, including Spain, shows that there is a significant persistence of overqualification. In other words, many of those who access positions for which they are overqualified remain considerable time in this situation, while for others overqualification is not a problem at practically any time in their working lives (Ramos, 2015). 

If we observe the most recent data for Spanish graduates in graph 2, we see that the percentage of young university graduates who are overqualified in their first job is quite high: 38%. In other words, in their first post after leaving university, over one out of every three graduates take a position that requires an educational level such as higher or secondary vocational training, or completion of secondary school or basic education. Four years later, the aggregated percentage has fallen to 25%.

The figures are similar to those observed in the United Kingdom in the last decade, where some 38% of qualified people were overqualified for their first job and, six years later, some 30% remained in the same situation (Dolton and Vignoles, 2000). However, these figures contrast significantly with those of other countries, such as Italy, where according to some studies, overqualification after graduation stands at 13.2% and falls to 8% at five years (Caroleo and Pastore, 2013).

3. Overqualification and unemployment

As we have already mentioned, the figures for overqualification refer, by definition, only to those individuals who are working in a post that requires a lower educational level than that possessed by the worker. However, to better understand the value of qualifications in the jobs market, just as relevant as knowing the degree of appropriacy to the post is identifying whether difficulties exist in securing a job. With this aim, a more complete educational mismatch indicator has been calculated that allows simultaneous identification for each graduate of their occupational status in their first job (if they ever worked) and four years after leaving university (if currently working). Two dimensions are incorporated into it: one temporal, to compare the occupational situation at two different moments in time (in the first job and four years after graduation) and a second dimension related to employment, to find out the value of university qualifications not only for people who are in work but also for those who have not secured a job (unemployment/overqualification/suitable work). The five categories of the indicator are presented in table 1, and the distribution of graduates in these categories. can be found in graph 3. 

The table compares the educational mismatch in the graduates' first job after graduating and the situation in their current job, 4 years after leaving university. The most noteworthy point is that less than half of university graduates (45.7%) secure jobs suited to their qualifications, both in their first job and 4 years after graduation (green block). In fact, some 30% of the university graduates do not secure jobs matching their education in the first 4 years following graduation: 15.5% were overqualified both in their first job and in their current job (persistent overqualification, red block), and another 15% were either not working, had a job for which they were overqualified, or alternatively had never had a paid job in the 4 years since they graduated (grey block).

Although neither persistent overqualification (red block) nor being outside the labour market for 4 years (grey market) seem a priori to be the most desirable situations for university graduates, the practical implications for each are very different. Being out of work some years after graduation (grey block) is, on occasions, due to further studies or training and therefore is not particularly problematic if it is a case of inactivity (voluntary) and not unemployment (involuntary). 

Four years after leaving university, some 30% of graduates have still not found a job suited to their qualifications, although 46% achieve adequate employment both in their first job and four years after their university graduation.

What is truly concerning for university graduates is persistent overqualification (red block), i.e., the accumulation for years of jobs for which they are overqualified. The reason is twofold: firstly, the obsolescence of skills, because their knowledge and skills are not being put into practice they deteriorate and depreciate; and secondly, a signalling effect, in the sense that accumulating experience in less qualified positions gives negative signals to potential future employers, since it has been shown that people who accumulate work experiences in positions for which they are overqualified have fewer probabilities of escaping that situation than those who are inactive (Mavromaras & McGuinness, 2012; Ramos, 2015). In conclusion, lower-qualified posts do not act as a springboard for obtaining more work experience and gaining access to better positions, but rather they are largely dead-end jobs which in many cases contribute towards perpetuating the educational mismatch.

4. The importance of course subject type and social background

Not all university graduates have the same risk of overqualification. In fact, the course subject studied is an important predictor of subsequent occupational results: the probabilities of employment, salaries or the risk of overqualification. In reference specifically to overqualification and unemployment, graph 4 represents the five categories analysed, but in this case it distinguishes between areas. It can be observed that here is a broad variation between fields of knowledge in the results on the labour market. Specifically, the risk of persistent overqualification 4 years after leaving university (red blocks) varies widely with degree type: it is very high (above 25%) for subjects in areas such as Tourism, Arts and Humanities and Social Work; whereas in others such as Medicine, Nursing or Health Sciences it is very low (below 5%). 

These results coincide with those observed in previous research on the educational mismatch in Spain by studies area, in which it is systematically observed that there is a greater risk of overqualification among graduates in the Arts and Humanities, Education Studies or Social Sciences; whereas the risk of overqualification is much lower in engineering positions, Architecture, or Natural sciences and health area studies (Ortiz & Kucel, 2008; Barone & Ortiz, 2011; Marqués & Gil-Hernández, 2015)

Overqualification is not transitory but persistent, especially in qualifications such as Tourism, Arts and Humanities.

There is no single explanation of why some qualifications give access to much more successful work career paths than others in terms of educational mismatch. We could identify basically two types. The first explanation is related with the skills and knowledge acquired in the different subjects. In this respect it has been argued that there are courses that are more generalist, such as Arts, Humanities or Social Sciences, where multi-disciplinary skills are developed that are applicable to a wide range of occupations; whereas in others such as Architecture, Medicine, Nursing or engineering, the skills provided are specific to performing a single occupation (Robst, 2007). However, while it is true that academic qualifications have a different value in the jobs market, a second complementary explanation must not be overlooked, and it would be situated at the point just prior to entering university: the characteristics of students and their families, which influence the decision to study one degree or another (Arcidiacono et al., 2012), for example their intellectual capacity and prior academic results or background social position.

In reality, both explanations operate simultaneously and it is not easy to distinguish the effect of the degree studied from that of social background, because to a large extent the decision itself regarding which subject to study is very much influenced by the family’s socioeconomic position. Furthermore, what might happen, as shown in the case of Italy, is that the effect of the study area on the risk of overqualification is different for graduates according to their social background (Capsada , 2015). In fact, from a set of European countries analysed by Barone & Ortiz, 2011 (Spain, Italy, Austria, Germany, Czech Republic, Netherlands, Norway and Finland), Spain is the only one where marked effects are observed of the family background on the risk of overqualification, i.e., where social class strongly influences overqualification.

Less qualified jobs are not usually a springboard for obtaining more work experience and gaining access to better posts; rather they tend to become dead ends that perpetuate the educational mismatch.

Prior research focusing on Spain suggests that the socioeconomic background of the family has a major influence on the risk of overqualification, even when taking into account the type of course studied. In this sense, Ortiz & Kucel (2008) observed that there are significant differences in the probability of being overqualified for different areas of study. And the result is maintained even after taking into consideration self-selection by individuals from different social backgrounds of different areas of study, in other words, even taking into account the fact that the choice of studies varies according to social background. For their part, Marqués & Gil-Hernández (2015) confirmed also that, once the area of studies was considered along with additional factors such as, for example, qualifications or characteristics of the post, a significant social background effect exists (measured through the education of the father) on the probability of overqualification. To put it another way, individuals whose fathers have a higher educational level have a lower risk of overqualification, even with the same work experience, university course and average grade.

In summary, these results suggest that an individual’s social position by origin has an indisputable effect on educational mismatch. This effect arises both directly and indirectly through its influence on educational choices. The results have implications in relationship with social and educational policy. Therefore, if one wants to reduce the effect of the social background on occupational results for graduates, one of the possible solutions would consist of promoting, through grants or scholarships, that social background no longer be such a determining factor in educational pathways and occupational results.

María Ramos, Post-doctoral researcher  

Carlos III University of Madrid

5. References

Alba, A. (1993): «Mismatch in the Spanish labor market: Overeducation?», Journal of Human Resources, 259-278.

Arcidiacono, P., V. J., Hotz, & S. Kang (2012): «Modeling college major choices using elicited measures of expectations and counterfactuals», Journal of Econometrics, 166(1), 3-16.

Barone, C., & L. Ortiz (2011): «Overeducation among European University Graduates: a comparative analysis of its incidence and the importance of higher education differentiation», Higher Education, 61(3), 325-337.

Capsada, Q. (2015): «The role of social origin and field of study on graduates’ overeducation: the case of Italy», Higher Education, 69(5), 779-807.

Caroleo, F. E., & F. Pastore (2013): «Overeducation at a Glance: Determinants and Wage Effects of the Educational Mismatch, Looking at the AlmaLaurea Data», IZA Discussion Paper, n. 7.788.

Dolton, P., & A. Vignoles (2000): «The incidence and effects of overeducation in the UK graduate labour market», Economics of Education Review, 19(2), 179-198.

Marqués, I., & C. J. Gil-Hernández (2015): «Social Origins and Over-Education of Spanish University Graduates: Is Access to the Service Class Merit-Based?», REIS, 150, 89-112.

Mavromaras, K., & S. McGuinness (2012): «Overskilling dynamics and education pathways», Economics of Education Review, 31(5), 619-628.

Ortiz, L., & A. Kucel (2008): «Do fields of study matter for over-education? The cases of Spain and Germany», International Journal of Comparative Sociology, 49(4-5), 305-327.

Quintini, G. (2011a): «Over-Qualified or Under-Skilled: A Review of Existing Literature», OECD Social, Employment and Migration Working Papers, n. 121, OECD Publishing, Paris.

—(2011b):  «Right for the Job: Over-Qualified or Under-Skilled?», OECD Social, Employment and Migration Working Papers, núm. 120, OECD Publishing, Paris.

Ramos, M. (2015): «Overeducation among Spanish graduates: stepping-stone or dead-end?», Competencies, firms and qualification mismatch. Returns to education and their limits. Doctoral thesis, Department of Economics, UAH.

Robst, J. (2007): «Education and job match: The relatedness of college major and work», Economics of Education Review, 26(4), 397-407.

Sicherman, N. (1991): «"Overeducation" in the Labor Market», Journal of Labor Economics, 9(2), 101-122.

 

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María Ramos, Post-doctoral researcher at the Carlos III University of Madrid

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