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
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
Technological change Organizational change Institutional change Great Recession & aftermath Drivers of skilled labour demand? ICT Digitalization Automation Offshoring of services Global value chains Digital Taylorism Decentralized decision making Remote working practices Deunionization Labour market flexibility Minimum wages, Social protection Capital formation, High-skill vacancies Productivity growth 3
Is this the typical European graduate labour market? Source: Patrick: https://flic.kr/p/cpv74 4
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
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 www.researchcghe.org 6
Rise of tertiary educational attainment 2005-2015 (30-34 years) 70% 60% 50% 40% 30% 20% 10% 0% 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 Source: EU-LFS. Authors calculations 2015 2005 7
Gap in tertiary education between 30-35% 34 and 55-59 years olds, 2015 30% 25% 20% 15% 10% 5% 0% 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 8
Growth of Graduate Jobs, in brief Prevalence of graduate jobs varies a lot The quality of graduates relative to nongraduates 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 www.researchcghe.org 9
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 60,0% 50,0% 40,0% 30,0% 20,0% 10,0% Proportion of labour in graduate jobs across countries 0,0% Source: Henseke and Green, 2017. 10
The prevalence of graduate jobs correlates with The skill level of graduates (+) The skill level of graduates relative to skilled nongraduates (+) 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. 11
Average annual growth rate (%) High-skill job growth (2005/2015) 7 6 5 4 3 2 1 0 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 Source: EU-LFS. Authors calculations 12
Trends in Underemployment, in brief 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. www.researchcghe.org 13
Finland Poland Norway Germany Cyprus Italy Sweden Netherlands Slovakia Belgium Spain France Austria Denmark Estonia United States United Kingdom Korea Ireland Canada Czech Japan Underemployed graduates, observed and skills adjusted 60,0% 50,0% 40,0% 30,0% 20,0% 10,0% 0,0% Observed Skills Adjusted Source: Green and Henseke, 2016. 14
Change in the proportion of employed graduates in middle- or low-skilled jobs (2005/2015, ages 30-34) 20 15 10 5 0-5 -10-15 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 15
GRADUATES IN MIDDLE- OR LOW-SKILLED JOBS (CHANGE, PERCENTAGE POINTS) Relation between excess graduate labour supply and underemployment (30-34 years) 20 15 GR R² = 0,5358 10 PL 5 0-5 UK SE IT 0 ES 1 2 3 4 5 6 7 8 DE -10-15 RELATIVE GRADUATE LABOUR SUPPLY (GROWTH RATE) Source: EU-LFS. Authors calculations 16
Graduate Wage Trends, in brief 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 www.researchcghe.org 17
Growth of median monthly graduate labour income (in %) Growth rate of average graduate earning (2006/2014, 25-34 years) 4 3 2 1 0-1 -2-3 -4-5 -6 EL CY UK SI IT NL ES IE LT HU CZ DK BE DE AT FR FI SE PL EE NO SK Source: EU-SILC. Authors calculations 18
The changing wage differential between tertiary and (upper-) secondary education, 2006 and 2014 0,6 0,5 0,4 0,3 0,2 0,1 0 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 19
Graduate wage premium (change in log points, 2006/2014) Relation between excess graduate labour supply and the wage premium (25-34 years) 0,1 0,05 0-0,05 ES DE UK IT 0 1 2 3 4 5 6 7 8 SE -0,1-0,15-0,2 PL R² = 0,2744-0,25 Relative graduate labour supply (growth rate) Source: EU-LFS, EU-SILC. Authors calculations 20
Graduate Wage Dispersion, in brief 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 www.researchcghe.org 21
Change underemployment wage penalty, 2006-2014 Underemployment wage penalty rose in some but not all countries (25-34 years) 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 Source: EU-SILC. Authors calculations 22
Change underemployment wage penalty, 2006-2014 How has wage inequality within graduates evolved? (25-34 years) 0,2 0,15 0,1 IT GR R² = 0,3712 0,05 0-0,05 PL ES UK 0 1 2 3 4 5 6 7 8 DE -0,1-0,15-0,2 Relative graduate labour supply (growth rate) Source: EU-LSF, EU-SILC. Authors calculations 23
Graduate Employment Clouds? 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 www.researchcghe.org 24
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) www.researchcghe.org 25