LABOUR MARKETS PERFORMANCE OF GRADUATES IN EUROPE: A COMPARATIVE VIEW

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LABOUR MARKETS PERFORMANCE OF GRADUATES IN EUROPE: A

COMPARATIVE VIEW

Dr Golo Henseke, UCL Institute of Education

2018 AlmaLaurea Conference “Structural Changes, Graduates and Jobs”, 11^th June 2018

www.researchcghe.org 1

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From 2005-2015, by how

much has tertiary educational attainment risen among 30-34 year-olds across the EU? …

• 22 percentage points

• 11 percentage points

• 4 percentage points

2

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Drivers of skilled labour demand?

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Technological change

• ICT

• Digitalization

• Automation

• Offshoring of services

• Global value chains

• …

Organizational change

• Digital Taylorism

• Decentralized decision making

• Remote working practices

• …

Institutional change

• De-

unionization

• Labour market flexibility

• Minimum wages, Social protection

• …

Great Recession & aftermath

• Capital formation,

• High-skill vacancies

• Productivity growth

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Source: Patrick: https://flic.kr/p/cpV74 4

Is this the typical European graduate labour

market?

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Today's outline: focus on

heterogeneity among young graduates

1. Context: graduate labour supply trends,

"graduate jobs" & graduate underemployment.

2. A picture of heterogeneity across Europe's graduate labour markets

5

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Growth of Graduate Labour Supply, in brief

• Tertiary-educated graduates have become more prevalent everywhere, but at a widely varying pace

• They will go on growing everywhere for some time to come

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Rise of tertiary educational attainment 2005-2015 (30-34 years)

7

0%

10%

20%

30%

40%

50%

60%

70%

ES BE FI DK DE FR IT NO EE NL SE SK CY IE UK GR LU HU CZ CH SI AT LT LV PL 2015 2005

Source: EU-LFS. Authors’ calculations

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Gap in tertiary education between 30- 34 and 55-59 years olds, 2015

8

0%

5%

10%

15%

20%

25%

30%

35%

EE FI DE BE IT SK CZ AT HU LV ES UK NO NL SI CH LU GR DK SE FR IE LT CY PL Source: EU-LFS. Authors’ calculations

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Growth of Graduate Jobs, in brief

• Prevalence of graduate jobs varies a lot

• The ‘quality’ of graduates relative to non-

graduates explains some cross-country variation

• Graduate jobs have grown more prevalent almost everywhere, though at a varying pace

• Some occupations can switch between graduate and non-graduate

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10

Proportion of labour in graduate jobs across countries

0,0%

10,0%

20,0%

30,0%

40,0%

50,0%

60,0%

Indonesia Chile Turkey Austria Greece Czech Republic Japan Slovenia Germany France Ireland Korea Estonia Italy Canada Denmark New Zealand Spain Lithuania United States Slovak Republic United Kingdom Poland Cyprus Belgium Sweden Singapore Israel Netherlands Finland Norway

Source: Henseke and Green, 2017.

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The prevalence of graduate jobs correlates with …

• The skill level of graduates (+)

• The skill level of graduates relative to skilled non- graduates (+)

• The dropout rate from higher education (-)

• The prevalence of generic tertiary degrees (-)

With the quality and selectivity of tertiary

education systems the percentage of workers in graduate jobs changes.

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High-skill job growth (2005/2015)

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0 1 2 3 4 5 6 7

DK DE EE NL BE CH FI SK NO UK HU IT SE GR CY FR SI ES CZ AT LT LV IE PL LU

Average annual growth rate (%)

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• Graduate underemployment varies considerably across countries

• Graduate underemployment is increasing in some countries, but not all

• If the supply of graduates grows faster than demand, on average, prevalence of

underemployment rises.

Trends in Underemployment, in brief

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Underemployed graduates, observed and skills adjusted

14

0,0%

10,0%

20,0%

30,0%

40,0%

50,0%

60,0%

Finland Poland Norway Germany Cyprus Italy Sweden Netherlands Slovakia Belgium Spain France Austria Denmark Estonia United States United Kingdom Korea Ireland Canada Czech Japan

Observed Skills Adjusted

Source: Green and Henseke, 2016.

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Change in the proportion of employed graduates in middle- or low-skilled jobs (2005/2015, ages 30-34)

-15 -10 -5 0 5 10 15 20

LT FI BE EE CH DE ES LU FR DK NL CY IT SE NO HU LV UK CZ AT IE PL SK GR SI Source: EU-LFS. Authors’ calculations

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Relation between excess graduate labour supply and underemployment (30-34 years)

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R² = 0,5358

-15 -10 -5 0 5 10 15 20

0 1 2 3 4 5 6 7 8

GRADUATES IN MIDDLE-OR LOW-SKILLED JOBS (CHANGE, PERCENTAGE POINTS)

RELATIVE GRADUATE LABOUR SUPPLY (GROWTH RATE) DE

ES

GR

SE IT

UK

PL

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• Great cross-national differences in the evolution of graduate earnings

• Growth of average graduate earnings is closely associated with labour productivity trends

• Earnings gap between graduates and lower educated groups is broadly stable in most countries

Graduate Wage Trends, in brief

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Growth rate of average graduate earning (2006/2014, 25-34 years)

Source: EU-SILC. Authors’ calculations 18

-6 -5 -4 -3 -2 -1 0 1 2 3 4

EL CY UK SI IT NL ES IE LT HU CZ DK BE DE AT FR FI SE PL EE NO SK Growth of median monthly graduate labour income (in %)

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The changing wage differential between tertiary and (upper-) secondary education, 2006 and 2014

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0 0,1 0,2 0,3 0,4 0,5 0,6

SI HU EL PL SK CZ SE LT CY FI DK ES IE AT NO IT EE UK DE BE NL FR 2014 2006

Source: EU-SILC. Authors’ calculations

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Relation between excess graduate labour supply and the wage premium (25-34 years)

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R² = 0,2744

-0,25 -0,2 -0,15 -0,1 -0,05 0 0,05 0,1

0 1 2 3 4 5 6 7 8

Graduate wage premium (change in log points, 2006/2014)

Relative graduate labour supply (growth rate)

UK

Source: EU-LFS, EU-SILC. Authors’ calculations

IT ES

DE

PL SE

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• Underemployment wage penalty rose in some but not all countries.

• But there is no general trends towards greater wage inequality

• Where excess graduate labour supply rose faster, the underemployment wage penalty widened

Graduate Wage Dispersion, in brief

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-0,2 -0,15 -0,1 -0,05 0 0,05 0,1 0,15 0,2

LT DE FI CY DK FR UK ES EE SI PL SK NL BE NO AT GR SE HU IT IE CZ Change underemployment wage penalty, 2006-2014

Underemployment wage penalty rose in some but not all countries (25-34 years)

Source: EU-SILC. Authors’ calculations 22

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How has wage inequality within graduates evolved? (25-34 years)

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R² = 0,3712

-0,2 -0,15 -0,1 -0,05 0 0,05 0,1 0,15 0,2

0 1 2 3 4 5 6 7 8

Change underemployment wage penalty, 2006-2014

Relative graduate labour supply (growth rate) IT

ES UK

GR

PL

DE

Source: EU-LSF, EU-SILC. Authors’ calculations

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• Universal rise in the supply of graduates and graduate jobs

• Latter grew slower than former in many but not all countries. The result is growing underemployment

• Average graduate wages stagnated or fell in most countries. Earnings growth is closely associated with trends in labour productivity

• On average, when the supply of graduates outgrew graduate jobs, underemployment rose, the returns to tertiary education diminished and the underemployed wage penalty rose

Graduate Employment Clouds?

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Green, F. (2013).Skills and Skilled Work. An Economic and Social Analysis. Oxford, Oxford University Press.http://discovery.ucl.ac.uk/1490672/

Green, F. and G. Henseke (2016a) "Should governments of OECD countries worry about graduate underemployment?" Oxford Review of Economic Policy. (http://discovery.ucl.ac.uk/1522165/ ).

Green, F. and G. Henseke (2016b). "The Changing Graduate Labour Market: Analysis Using a New Indicator of Graduate Jobs". IZA Journal of Labor Policy, 5:14. (http://discovery.ucl.ac.uk/1505789/) Green, F. and G. Henseke (2017). “Graduates and ‘graduate jobs’ in Europe: a picture of growth and diversification”. CGHE Working Paper, 25.

Henseke, G. and F. Green (2017) “Cross-national Deployment of “Graduate Jobs”: Analysis Using a New Indicator Based on High Skills Use". Research In Labor Economics. (http://discovery.ucl.ac.uk/1542476/) Henseke, G. (2018). “Against the Grain? Assessing Graduate Labour Market Trends in Germany Through a Task-Based Indicator of Graduate Jobs”. Social Indicators Research (http://rdcu.be/GJDs)