The Scarring Effect of Graduate Underemployment: Evidence from the UK

Matt Dickson, Michael Donnelly (), Kalyan Kumar Kameshwara () and Predrag Lazetic ()
Additional contact information
Michael Donnelly: University of Bath
Kalyan Kumar Kameshwara: Westminster Business School
Predrag Lazetic: University of Bath

No 17364, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The UK has one of the highest proportions of tertiary educated workers in Europe but also one of the highest rates of graduate underemployment. Little is known however about the extent to which there is a scarring effect of early graduate underemployment on future labour market outcomes. In this paper, we examine the effect of early underemployment using data on 67,000 graduates from undergraduate degrees in the UK in 2013. Labour market outcomes at six-months and 42-months post-graduation are linked to administrative records covering higher education, prior attainment, demographics and family background. We find that compared to being in a graduate job six-months post-graduation, early experience of underemployment increases the probability of being underemployed three years later by 0.24. Oster bounds analysis suggests that the causal effect of early underemployment on later underemployment is at least +0.18. This is a large effect relative to the base risk of underemployment at 42-months for those in a graduate job at six-months which is just 0.09. We highlight important implications of these findings, with arguments from both equity and efficiency for policies to help graduates to attain graduate level jobs.

Keywords: underemployment; graduates; higher education; persistence; United Kingdom (search for similar items in EconPapers)
JEL-codes: I23 I26 J24 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2024-10
New Economics Papers: this item is included in nep-eur and nep-lma
References: Add references at CitEc
Citations:

Downloads: (external link)
https://docs.iza.org/dp17364.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp17364

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().