More Necessary and Less Sufficient: An Age-Period-Cohort Approach to Overeducation in Comparative Perspective

Eyal Bar-Haim (), Louis Chauvel () and Anne Hartung ()

No 734, LIS Working papers from LIS Cross-National Data Center in Luxembourg

Abstract: In many countries, the skilled labor market has lagged behind educational expansion. As a result of increased competition, younger cohorts of the highly educated face decreasing returns to education or overeducation. Surprisingly, decreasing occupational outcomes do not coincide empirically with the economic returns among those with tertiary education. Regarding the process of changes in economic returns to education based on cohort transformations, we expect that the expansion of tertiary education affects specific cohorts, which find themselves facing more labor market competition. As a result, the economic returns to education should decrease over cohorts even though they remain stable and even increase during the same period. To study this process, we model economic returns with a new Age-Period-Cohort-Trended-Lag (APCTLAG) method, which allows comparing the gap in economic returns between tertiary and less than tertiary education over cohorts. Using the Luxembourg Income Study (LIS), we analyze trends over three decades in 12 countries. Our results confirm that educational returns for tertiary education have declined over time, even though the gap between the educated and the less educated has remained similar in most of the countries. For younger cohorts, tertiary education has become more necessary to survive in the competitive labor market, but the actual economic returns to it have decreased - making tertiary education less sufficient than before.

Pages: 37 pages
Date: 2018-04
New Economics Papers: this item is included in nep-edu and nep-eur
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Published in Higher Education, 78 (2019): 479–499. https://doi.org/10.1007/s10734-018-0353-z

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