The UK graduate labour market: introduction.

Mason, Geoff

The remarkable growth in annual university graduate output in the UK within the space of a few years in the early 1990s has provided a rich field of study for labour market and higher education (HE) researchers. Indeed, in many ways this phenomenon came as close to providing a 'natural experiment' as social scientists are ever likely to get, enabling them to address questions such as: What are the effects of a rapid transition from elite HE to mass HE on labour market outcomes for graduates? In what ways, if any, do employers respond to rapid expansion of the supply of graduate jobseekers? What effects, if any, does the greater availability of highly-qualified people have on job performance and labour productivity in British workplaces?

Research findings on these and related questions attract widespread interest from newsmedia and policymakers, and this is hardly surprising given the substantial public resources invested in HE and the intensity of policy debates surrounding HE funding, organisation and participation. In this issue of NIER we are pleased to publish four articles which make important contributions to these debates.

The first article by Peter Elias and Kate Purcell presents new evidence on the extent to which graduates in the 1990s were unable to find employment that made use of the skills and knowledge they had acquired during their university studies. Numerous previous studies have suggested that a sizeable proportion of new graduates--roughly one in three--may be 'overeducated' or 'underutilised' in some way. Most of these studies were based on graduates' labour market experiences within six months of graduation. By contrast, Elias and Purcell's work is based on longitudinal surveys which track the career histories of 1992 and 1995 graduates over a seven-year period since graduation.

For the cohorts studied, they find that the proportion of graduates working in non-graduate jobs declined steadily over a five-year period from 33-35 per cent shortly after graduation to about 13 per cent. This transition was much the same for 1995 graduates who entered the labour market after the expansion of graduate output was well under way as it was for 1992 graduates who entered the labour market near the beginning of the supply-side expansion. Furthermore, the rate of growth of real earnings over a period of six or seven years after graduation was found to be much the same among 1995 graduates as it was for a national sample of graduates who gained their first degrees in 1980, well before the expansion in supply.

Significant proportions of graduates from the 1995 cohort were working in new or 'niche' graduate occupations which required use of skills developed during their university studies. This reflected occupational restructuring, enhanced job descriptions and expanded roles for technical and managerial specialists within many firms. The central conclusion drawn by Elias and Purcell, therefore, is that the increased supply of graduates in the UK has largely been matched by increased employer demand for highly-qualified personnel.

The apparent absence of any upward trend in graduate overeducation or underutilisation is striking and is consistent with other evidence that the extent of mismatch between educational qualifications and job requirements following the expansion of higher education is not greatly different from that identified in an earlier pre-expansion cohort in the first half of the 1980s (Dolton and Vignoles, 2000). However, further research is needed into whether the stability of the average earnings premium for recent graduates conceals a widening dispersion of graduate salaries and career prospects around average outcomes. Other studies have suggested that even an initial period of overeducation or underurilisation for some graduates may have lingering negative effects on their salary and career prospects (Green, McIntosh and Vignoles, 2002).

As well as seeking to increase the rate of HE participation in the UK, the Government also aspires to widen participation to include larger proportions of students from lower socio-economic groups. In the second article presented here, Fernando Galindo-Rueda, Oscar Marcenaro-Gutierrez and Anna Vignoles present new evidence on trends in HE participation between 1994 and 2001, a period which spans the introduction of upfront tuition fees.

Although the rate of participation by lower socio-economic groups rose sharply over this period (from a very low base), the gap in participation rates between children from poor neighbourhoods and those from richer neighbourhoods widened still further. This trend began before the introduction of tuition fees and appears to largely reflect inequalities in educational opportunities and attainments at earlier stages of education. These findings highlight the difficulties confronting universities which are under pressure to meet government targets for wider participation by lower socio-economic groups.

It might have been expected that the development of mass HE would have a positive effect on the availability of suitably-qualified teachers in secondary and primary education. However, in fact there is considerable evidence of teacher recruitment difficulties and concerns about teacher quality in specialist subjects such as maths and science, In the third article, Peter Dolton and Tsung-Ping Chung examine one potential source of these problems by comparing the earnings of qualified teachers who choose to teach with the earnings of qualified teachers who are employed in non-teaching occupations. This represents an interesting departure from previous studies in this field which have compared teachers' salaries against those of all other graduates in non-teaching occupations.

Dolton and Chung's estimates of lifetime earnings for teaching-qualified graduates suggest that, for male teachers in both primary and secondary education, the 'rate of return on career choice' progressively declined relative to teaching-qualified men in alternative occupations in the period from 1975 to 2001. Indeed, this rate of return has actually been negative for male teachers since the mid-1990s. By contrast, female teachers' earnings remained consistently above those of teaching-qualified women in alternative occupations between 1975-2001. However, the estimated rate of return on career choice for female teachers also steadily declined between 1975 and 2001 even though it remained positive throughout this period. These findings, and especially those for male teachers, are clearly disconcerting for policymakers seeking to attract high-quality graduates into the teaching profession.

In the fourth article, Philip Stevens finds grounds for similar concern about future recruitment of high-quality postgraduates to academic teaching and research positions in Britain's universities. He estimates that, at the age of 30, an academic earns only 72 per cent of the average earnings enjoyed by graduates outside higher education. By the age of 50 this differential has narrowed slightly to 86 per cent but it is only towards the very end of working life that academics achieve parity with non-academics. This disparity in favour of non-academic lifetime earnings also occurs in the US. However, Stevens finds that academics in the UK earn less at all ages than their US counterparts, and particularly so at later stages of their working lives. The implication for UK university recruiters is that poor relative salary prospects for academics in the UK graduate labour market may be compounded by salary incentives, at least for the highest-quality staff, to depart for jobs in US universities.

REFERENCES

Dolton, P. and Vignoles. A. (2000), 'The incidence and effects of over-education in the UK graduate labour marker', Economics of Education Review, 19, pp. 179-98.

Green, F., McIntosh, S. and Vignoles, A. (2002), "The utilisation of education and skills: evidence from Britain'. Manchester School of Economic and Social Studies, 70, 6, pp. 792-811.

Geoff Mason, National Institute of Economic and Social Research. e-mail: g.mason@niesr.ac.uk