We develop a statistically-derived indicator, conceptually based on the skill requirements of jobs, for identifying graduate jobs from their unit group occupational code. We use representative survey data on skills utilisation and clustering methods for the classification. The method is transparent, replicable, and could be flexibly applied in a variety of settings. The indicator performs better than existing indicators in validation tests.
To demonstrate the indicator’s utility, we then analyse the development of the British graduate labour market between two averaged periods, 1997/2001 and 2006/2012. Key findings include:
– Over this interval, the share of graduate jobs in the British labour market rose from 32% to 40%.
Employment growth and the upskilling of jobs contributed roughly 60:40 to the growth of graduate employment, though the picture varied among socio-economic groups.
– While there has also been a very large growth by more than 10 percentage points in the share of graduates in the labour force, the overall prevalence of overeducation among graduates has been stable at around 30%.
– As in the literature, overeducated graduates receive on average lower wages compared with matched graduates, but higher wages than workers with an adequate level of education.
– For men the wage premium for matched graduates relative to matched non-graduates has increased over time from 89% to 104%, while for women it has remained stable at 110%.
– The wage gap between matched and mismatched graduate workers has increased over time from 47% to 67%, thus providing further evidence covering up to 2012 that there is an increasing dispersion in the returns to graduate education.