THE SYSTEM LEVEL CAUSES AND CONSEQUENCES OF FIELD OF STUDY MISMATCHGuillermo MonttDirectorate for Employment, Labour and Social Affairsguillermo.montt@oecd.org

ELS SeminarJune 2015

What is field-of-study mismatch?

“English Lit – How about you?”

E.g. • a pharmaceutical

technician (ISCO 321) is matched if studied science or health

• a 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:

1) General programmes2) Teaching and education3) Humanities, languages, arts4) Social sciences, business, law5) Science, mathematics,

computing6) Engineering, construction,

manufacturing7) Agriculture and veterinary8) Health and welfare9) Services

Each 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 study

• 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 outcomes• Relationship to other forms of mismatch• Relationship to labour market dynamics• System-level costs of FoS mismatch

Why should we care about studying field-of-study mismatch?

Should we care and/or do anything about field of study mismatch?

• PIAAC Survey of Adult Skills, 2012

• Data for 24 countries

• Cross-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 methods

Kore

a

Engl

and/

N. Ir

elan

d (U

K)

Italy

Aust

ralia

Japa

n

Unite

d St

ates

Spai

n

Fran

ce

Russ

ian

Fede

ratio

n

Irela

nd

Pola

nd

Flan

ders

(Bel

gium

)

Coun

try A

vera

ge

Czec

h Re

publ

ic

Slov

ak R

epub

lic

Cana

da

Esto

nia

Denm

ark

Neth

erla

nds

Swed

en

Norw

ay

Aust

ria

Ger

man

y

Finl

and

0%

10%

20%

30%

40%

50%

60%

How much field-of-study mismatch is there?

Percentage of workers mismatched by field-of-study

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

0%20%40%60%80%100%

How much field-of-study mismatch is there?

0% 20% 40% 60% 80% 100%

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.

0%

20%

40%

60%

80%

100%

Field-of-study mismatch only Field-of-study and skills mismatchField-of-study and qualifications mismatch Field-of-study, qualifications and skills mismatch

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)

• 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 sectors– Roughly: 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?

Does saturation and transferability predict field of study mismatch?

The short answer: YESGraduates 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).

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%)

  Beta   S.E.

Intercept 2.46*** (0.05)

Field of study mismatch only 0.05** (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) Agriculture 0.07  (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 Engineering

• 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 inactive– Once 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 overqualification– It 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?

• 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 on– Number of mismatched individuals– Effect of mismatch

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

Engl

and/

N. Ir

elan

d (U

K)

Kore

a

Pola

nd

Irela

nd

Slov

ak R

epub

lic

Spai

n

Coun

try A

vera

ge

Czec

h Re

publ

ic

Neth

erla

nds

Japa

n

Italy

Flan

ders

(Bel

gium

)

Aust

ria

Denm

ark

Fran

ce

Swed

en

Norw

ay

Finl

and

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%Productivity Education Unemployment

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.

• 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!”

• Promote linkage between education provision and labour market needs– Skills assessment and anticipation systems linked to the

definition of vacancies

• Promote skill transferability so that FoS mismatch does not bring about over-qualification– Competency-based occupational frameworks

– Flexible re-skilling programmes

– General education

• Forcing match may not be a good idea given labour market dynamics

The recommendations

Contact: guillermo.montt@oecd.org

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Thank you

• 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 sector

– No one-to-one correspondence between field of study and sector

– Standardised with a mean 0, SD 1 for all country-field combinations

– Positive values indicate saturation greater than on average across fields

(back)

Saturation

• Logic: skills from the field are transferrable / valued in other sectors

Transferability= Number of skills well-matched in that sectorNumber of FoS mismatched in that sector

– No 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)

Transferability