Pulling Apart? A decade of change in Europe’s Graduate Labour Markets

Golo Henseke and Francis GreenLLAKES, UCL Institute of Education

UCL Institute of Education

Motivation

• Higher educational attainment is growing: 11 percentage points across Europe since 2005

• Fuelled by educational aspirations of a growing middle class, promoted by favourable policies, and expectation of economic returns

•UK, US: While access to higher education has widened, outcome stratification within graduates has grown (e.g., by university rank, degree class, degree level, graduate employment)

Drivers of skilled labour demand

Tech

no

logi

cal c

han

ge

• ICT

•Digitalization

•Automation

•Offshoring of services

•Global value chains

•…

Org

aniz

atio

nal

ch

ange

•Digital Taylorism

•Decentralized decision making

•Remote working practices

•…

Inst

itu

tio

nal

ch

ange

•De-unionization

•Labour market flexibility

•Minimum wages, Social protection

•…

Gre

at R

eces

sio

n &

aft

erm

ath

•Capital formation,

•High-skill vacancies

•Productivity growth

•…

Research Question

1. What are the trends in graduate wages and wage dispersion across European countries?

2. How well can changes in relative graduate labour demand

Growth of Graduate Labour Supply and high-skill jobs, in brief• Tertiary-educated graduates have become

more prevalent everywhere, but at a widely varying pace

• No satiation: They will go on growing everywhere for some time to come

• High-skill jobs have grown more prevalent widely, but not in Greece, Italy, Slovakia or Czech R.;

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

0%

10%

20%

30%

40%

50%

60%

70%

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

Tertiary attainment gap 30-34 to 55-59, 2015

0

20

40

60

80

100

120

140

160

180

FI EE DE BE NOUK AT ES NL LV CH HU DK IT SI SE CZ SK IE GR LT FR CY PT PL

Tert

iary

att

ain

men

t ga

p (

in

%)

High-skilled job growth, 2005 to 2015

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

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

ΔH

igh

-ski

ll e

mp

loym

en

t ra

te,

20

05

-20

15

Rising graduate earnings heterogeneity?

Changing earnings inequality

= different growth rates across the graduate earnings distribution.

= different growth rates across subgroups of graduates (e.g., age, gender, field of study, occupation)

Data

European Statistics on Income and Living Conditions (EU-SILC), 2005-2015

Sample:

-Graduates aged 25 to 34 years who worked for at least one fte-month in the year before the interview

Earnings:

Average earnings per fte month. In real PPP-EUR

Stagnating or declining graduate earnings across most European countries

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

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

Gro

wth

rat

e

Falling graduate wage “premium” in some countries

-2.5

-2

-1.5

-1

-0.5

0

0.5

1

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

Ave

rage

an

nu

al c

han

ge

No uniform trend towards greater income inequality within graduates

-0.3

-0.2

-0.1

0

0.1

0.2

0.3

SE HU PT DK PL BE DE UK NL LT CY ES EE

Cah

nge

P9

0/P

10

wag

e d

iffe

ren

tial

, 20

05

-20

07

an

d

20

13

-20

15

The growing relative graduate labour supply and changes of the wage “premium”

ATBECH

CY

CZ

DE

DK

EE

ESFI

FR

GRHU

IEIT

LT

NO

PL

PT

SE

SI

SK

UK

R² = 0.1979

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

-1 0 1 2 3 4 5 6 7

Wag

e d

iffe

ren

tial

(gr

ow

th r

ate)

Relative graduate labour supply (growth rate, %)

What now: Graduate Employment Clouds?Ongoing rise in supply of graduates

Demand uncertainty:•maturity of existing ICT?

•new-wave automation … or skills-intensive innovation?

•macroeconomic uncertainties

Will we see: rising underemployment; increasing dispersion of wage premia?

ReferencesGreen, 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 LaborPolicy, 5:14. http://discovery.ucl.ac.uk/1505789/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. (2019). Against the Grain? Assessing Graduate Labour Market Trends in Germany Through a Task-Based Indicator of Graduate Jobs. Social Indicators Research, 1-32. https://rdcu.be/bbnW7Green, F. (2013). Skills and Skilled Work. An Economic and Social Analysis. Oxford, Oxford University Press. http://discovery.ucl.ac.uk/1490672/