By Guillermo Montt and Glenda Quintini
The young psychology graduate working at a call centre or the mathematician making a fortune as a trader: we have all heard these stories or some version of them. But just how frequent are these situations and what are the consequences for the individuals involved is unknown?
The new study released today “The Causes and Consequences of Field-of-Study Mismatch: An Analysis Using PIAAC” (Montt, 2015), based on the Survey of Adult Skills (PIAAC) (2012) finds that approximately 39% of workers in the 22 OECD countries and regions covered are mismatched by field of study – i.e. their highest educational attainment is in a field (e.g. health and welfare for a psychologist) that is unrelated to their occupation (e.g. services for a job at a call centre). Field-of-study mismatch is most common in Korea, England/N. Ireland (UK) and Italy, where almost half of dependent workers are mismatched. Graduates from certain fields are more likely to be mismatched: around three in four graduates from agriculture and veterinary and languages, humanities and arts are mismatched. It is also more likely to find mismatched workers in certain occupational groups than others: around four out of ten workers in occupations related to services or to social sciences, business and law graduated from fields unrelated to these occupations. By contrast, mismatch by field of study is least common in Austria, Finland and Germany; among graduates from the social sciences, business and law and health and welfare. It is also less likely to find mismatched workers in occupations related to science, mathematics and computing and humanities, languages and arts.
(*): See notes Figure 1 in Montt (2015).
These are the statistics but should mismatch by field be a concern for students, workers or policy makers? This is an issue that often generates animated debates between those who believe in the general value of education irrespective of the labour market opportunities it leads to and those who think studying should lead to a good qualifications and job-specific competences that are related to labour market needs. The paper by Montt shows that field-of-study mismatch is a problem when it leads to jobs in which a worker’s educational attainment is not recognised – i.e. a job for which the worker is over-qualified. Field-mismatched workers who are also over-qualified (around 40% of all field-mismatched workers) suffer a wage penalty that amounts to 25% lower hourly earnings when compared to graduates in the same field and with the same education level that are well matched to their jobs. These overqualified field-mismatched workers are, for example, those tertiary graduates who cannot find a job in their own area of study and have to accept a job requiring only an upper secondary school certificate in order to work in another field – the psychologist at the call centre. By contrast, in the vast majority of countries, field-mismatched workers who are not over-qualified do not experience a wage penalty. These are workers (e.g. a tertiary graduate from the science, mathematics and computing sector) that are able to find work in another field (e.g. social sciences, business and law) without having to downgrade – the mathematician working as a trader.
As wages reflect – at least partly – productivity, field-of-study mismatch when coupled with over-qualification can aggregate to substantial productivity losses for the economy because many workers’ skills are not put to their full productive use in their jobs. Costs can also arise when mismatched workers remain mismatched for their entire career, rendering part of their training not useful (a sunk education cost). Conservative estimates for 2012 point to a cost of 0.5% of GDP as a result of field-of-study mismatch, on average across countries, with peaks of over 1% of GDP in England/N. Ireland (UK) and Korea. This lower-bound estimate is driven mostly by situations in which field-mismatched workers are also overqualified for their jobs.
The study goes beyond incidence and consequences and provides some explanations for why over-qualified field mismatch comes about, suggesting possible policy solutions. In fact, a novelty of the paper is that it identifies two separate phenomena as being at the root of over-qualified field mismatch: on the one hand, workers’ inability to find jobs in their respective field because there are too many graduates in the same field (i.e. the field is saturated); on the other hand, the fact that their skills are not recognised by employers in other occupations (i.e. credentials are not transferrable across fields).
Several lessons can be drawn for both labour market and education policy. Correctly assessing the current and projected demand (saturation) for specific fields can inform career guidance and the determination of places available for each field. Enhancing transferability is possible through greater provision of general skills, through comprehensive qualifications frameworks that promote the recognition of skills across different fields, through competency-based occupational standards that focus more on the skills owned rather than the credentials earned, or flexible re-training programmes and active labour market programmes that allow workers to earn a credential in another field without having to undergo the entire programme.
For further details, contact Guillemo.Montt@oecd.org