• Chris Ryan, Mathias G. Sinning
• National Centre for Vocational Education Research

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31 January 2011Younger workers, particularly those entering the workforce at ages 25–34 years, are more educated than ever before. The potential for these workers to be over-educated in their jobs might therefore be high. But does it follow that they are mismatched to the skill requirements of their jobs?

This study examines the link between over-education and skill mismatches for Australian workers aged 25–34 and 35–44 years of age, based on an analysis of data from the 1996 Survey of Aspects of Literacy and the 2006 Adult Literacy and Life Skills Survey. In addition, the wage returns from over-education and over-skilling are investigated.

This research provides an interesting comparison with work done by Mavromaras, McGuinness and King, which also looked at job mismatch in workers, using data from the Household Income and Labour Dynamics in Australia (HILDA) survey.

Key messages 

• This research confirms that there are substantial differences between the two concepts of over-education and over-skilling. Most over-skilled workers have low levels of education and require fewer skills at work than they actually have. The majority of under-skilled workers hold a university degree, suggesting that many highly educated workers find themselves in challenging jobs.
  
  
• However, over-education is associated with skills' under-utilisation.
  
  
• The effects of over-education on wages differ substantially across education levels, with the penalty from over-education less severe for highly educated workers than for workers with lower educational attainment.
  
  
• Ryan and Sinning find that it is the level of education more than the skill level of workers that determines their remuneration, with over-skilling having no additional effect on wages beyond that accounted for by over-education.

The cost of younger workers with vocational education and training (VET) qualifications being over-educated and in low-skill jobs is of concern. That this effect is also observed in slightly older workers suggests that some VET graduates find themselves entrenched in low-level jobs.

Image: silentDAN / flickr