The System Level Causes and Consequences of Field of Study - PowerPoint Presentation

Slide1

The System Level Causes and Consequences of Field of Study Mismatch

Guillermo

Montt

Directorate for Employment, Labour and Social Affairs

g

uillermo.montt@oecd.org

ELS Seminar

June 2015Slide2

What is field-of-study mismatch?

“English Lit – How about you?”

E.g.

a pharmaceutical technician (ISCO 321) is matched if studied

science

or healtha ship and aircraft controller and technician (ISCO 325) if studied engineering only

Theory: workers trained in a field but working in another, unrelated sector

Operational definitionEight fields of study:General programmesTeaching and educationHumanities, languages, artsSocial sciences, business, lawScience, mathematics, computingEngineering, construction, manufacturingAgriculture and veterinaryHealth and welfareServicesEach ISCO_08 3-digit occupations matched to each field (one or more)

In PIAAC, if an individual works in an occupation that does not correspond to its field of study, the worker is considered mismatched by field of studySlide3

Existing evidence:For workers it brings lower wages, lower job satisfaction, higher on-the-job search

More likely in certain fields than others (humanities, languages and arts vs. health and welfare)

Gaps in the literature:Updated cross-national

levels and effects of FoS

mismatch on individual outcomesRelationship to other forms of mismatchRelationship

to labour market dynamicsSystem-level costs of FoS mismatchWhy should we care about studying field-of-study mismatch?Should we care and/or do anything about field of study mismatch?Slide4

PIAAC Survey of Adult Skills, 2012Data for 24 countriesCross-country and pooled-sample analysis

Pooled analysis rescales weights to consider each country as a unit

All analyses (OLS, logit, path analysis) consider replicate weights and plausible values (where applicable)

Data and methodsSlide5

How much field-of-study mismatch is there?

Percentage of workers mismatched by field-of-study

Source: Survey of Adult Skills (PIAAC) (2012).Slide6

How much field-of-study mismatch is there?

Note: Cross-country averages. Source: Survey of Adult Skills (PIAAC) (2012).

(2) Teacher training and education science

(3) Humanities, languages and arts

(4) Social sciences, business and law

(5) Science, mathematics and computing

(6) Engineering, manufacturing and construction

(7) Agriculture and veterinary

(8) Health and welfare

(9)

Service

For a given group of graduates by field

For a given group of workers by occupation

>70% of graduates from humanities, languages and arts end up working in another sector

More than 40% of workers in the services sector come from other fields.Slide7

How much field-of-study mismatch is qualifications mismatch?

Source: Survey of Adult Skills (PIAAC) (2012).

>50% field of study mismatch is independent of skills or qualifications mismatch

In some countries around half is associated with qualifications mismatch (usually over-qualification)Slide8

Saturation:

there are too many graduates from this field and fewer jobs in the corresponding sector

Roughly: Number of graduates from the field

Number of workers in that sector

(for more details, click HERE)

Skill transferability: skills from the field are transferrable / valued in other sectorsRoughly: Number of skills well-matched in that sector Number of FoS mismatched in that

sector(for more details, click

HERE)What causes field-of-study mismatch?Slide9

Does saturation and transferability predict field of study mismatch?

The short answer: YES

Graduates from more saturated fields are more likely to be mismatched (

and

overqualified)

Graduates from fields with more transferability are more likely to be mismatched and well qualified

Results hold within countries as well

Note: Path analysis with country fixed effects. Source: Survey of Adult Skills (PIAAC) (2012).Slide10

Does field-of-study mismatch imply a wage penalty?

The short answer: Yes, when it also involves

overqualification

Note: Path analysis with country fixed effects. Source: Survey of Adult Skills (PIAAC) (2012).

Field-of-study

alone

carries a penalty only in England/N. Ireland (UK) (6%), Ireland (11%) and Estonia (8%)Slide11

Beta

S.E.

Intercept

2.46***

(0.05)

Field of study mismatch only0.05**(0.02) x Skill transferability  

x Major: (2) Teaching

-0.09

**

(0.03)

x Major: (3) Humanities

-0.06

*

(0.03)

x Major: (4) Social sciences

-0.11

***

(0.02)

x Major: (5) Sciences

-0.07

**

(0.02)

x Major: (6) Engineering

-0.04

*(0.02) x Major: (7) Agriculture0.07 (0.04) x Major: (8) Health-0.04 (0.02)Field of study mismatch and overqualification-0.04*(0.02) x Skill transferability    x Major: (2) Teaching-0.24***(0.03) x Major: (3) Humanities-0.22***(0.03) x Major: (4) Social sciences-0.25***(0.03) x Major: (5) Sciences-0.23***(0.03) x Major: (6) Engineering-0.21***(0.03) x Major: (7) Agriculture-0.02 (0.04) x Major: (8) Health-0.20***(0.03)The penalty varies by field

Linear regression with log(wages) as dependent variable. Services is the reference category for field of study. Models control for age, experience, tenure, contract type, public/private, firm size, numeracy, education level.Source: Survey of Adult Skills (PIAAC) (2012)

The penalty is stronger when there is

overqualification

, particularly for Teaching, Humanities, Social Sciences, Sciences and EngineeringSlide12

Previously mismatched by field of study are more likely than previously well matched workers to be unemployed or inactive (18% vs. 14%)

Significant in 17/22 countries

ESP, KOR, NOR, USA: FoS mismatched workers have over twice the odds of being unemployed or inactiveOnce out of work, previously mismatched workers do not spend more time out of work

Job satisfaction is generally high (79%). FoS mismatched are less satisfied only if

FoS mismatch implies overqualificationIt remains significant in CAN, FIN, KOR, USA after accounting for overqualification

Does field-of-study impact the risk of being out of work and job satisfaction?Slide13

Potential sources of costs:Losses in productivity (reflected in lower wages earned by mismatched individuals)

Sunk education costs

Higher unemployment benefits and lost income tax revenues Total cost depends onNumber of mismatched individualsEffect of mismatch

What are the costs of field-of-study mismatch to countries?Slide14

The cost of field-of-study mismatch can amount to more than 1% of GDP

Percentage of GDP

Highest share of costs comes from productivity costs (wages), most of which result from the

overqualification

associated to

FoS mismatch (assumes a 50-week work year)

Sunk education costs assume that “lost” education amounts to ½ a year for ISCED 3 and 1 year for ISCED 5.Slide15

FoS

mismatch results from labour market dynamics (saturation / shortage) and programme characteristics (skill transferability)

FoS mismatch is costly for individuals inasmuch it is a source of over-qualification

Its costs (when it leads to overqualification

) can aggregate to important national-level costs in terms of productivity and sunk education costs

The take-away point“But Michael, the labour market is awaiting you!”Slide16

Promote linkage between education provision and labour market needsSkills assessment and anticipation systems linked to the definition of vacancies

Promote skill transferability so that

FoS mismatch does not bring about over-qualificationCompetency-based occupational frameworksFlexible re-skilling programmes

General educationForcing match may not be a good idea given labour market dynamics

The recommendationsSlide17

Contact: guillermo.montt@oecd.org

Read more about our work Follow us on Twitter:

@OECD_Social

Website:

www.oecd.org/elsNewsletter: www.oecd.org/els/newsletter Thank youSlide18

Logic: there are too many graduates from this field and fewer jobs in the corresponding sector

Saturation =

Number of graduates from the field

Number of workers in that sectorNo one-to-one correspondence between field of study and sector

Standardised with a mean 0, SD 1 for all country-field combinationsPositive values indicate saturation greater than on average across fields(back

)SaturationSlide19

Logic:

skills

from the field are transferrable / valued in other sectorsTransferability= Number

of skills well-matched in that sector

Number of FoS mismatched in that sectorNo one-to-one correspondence between field of study and sector

Interpreted as percentage of field mismatched workers in the sector that are not skills mismatched(back)TransferabilitySlide20

“When you graduate, what kind of job are you

not

going to get?”Slide21

Hi! I’m willing to do your job at

half your salary!

Hello! I don’t need

medical insurance because I’m young, healthy and don’t have a

family!

Greetings! I grew up with computers. How about you?