The overqualified Canadian graduate: The role of academic program in the incidence, persistence and economic returns to over-qualification

Marc Frenette
Business and Labour Market Analysis Division
Economics of Education Review , Volume 23 (2004) pp. 29 - 45

Context

Over-qualification is an important issue as it has been linked to lower returns to schooling, lower use of skills acquired in school, lower job satisfaction and lower levels of productivity at the firm level. A substantial body of research has been established focusing on the estimation of the incidence of over-qualification in the labour market. From a student's or policy-maker's perspective, the association between over-qualification and academic program may, however, be of utmost interest.

Objectives

This study investigates the role of academic program in the incidence, persistence and economic returns to over-qualification among recent Canadian post-secondary graduates.

Findings

Over one-third of Canadian graduates are over-qualified for their job shortly after graduation in the early 1980s and show little improvement in the years following graduation.

The rate of over-qualification has diminished somewhat in the 1980s and 1990s. This finding may go against the popular belief that recent graduates have not fared so well in the labour market.

Academic program is strongly related to over-qualification-more than half of all graduates of masters programs are over-qualified for their main job-even five years after graduating.

There is a strong negative earnings penalty associated with over-qualification at the college and bachelor's level but is moderate or non-existent at upper levels. These earnings penalties are generally overstated in cross-sectional earnings models, most of which dissipates after accounting for unobserved heterogeneity in a longitudinal context.

Data source: National Graduate Survey, 1982, 1986 and 1990.