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The case for matching education with career outcomes

The case for matching education with career outcomes

Over-education is becoming the norm. Parents shepherd school-leavers towards university degrees before they even have their Year 12 results in hand and the curriculum now forces high school students to make subject choices that will affect their career path before they know what they want to do and what they’re good at. Let’s step back a bit. Let’s look at what students actually need to get a job, to start a career.

I read an alarming story about over-qualified students earlier this year. Among other things, the article mentioned how hard many students studied to go to prestigious universities such as Oxford only to emerge laden with debt and unable to find a job. This line in particular told me all I needed to know: “...in the past three years, Oxford has produced more accounts clerks than management consultants and more bar staff than young economists.” (‘Top university, a great degree – but as for a job, dream on’ by Tom Rowley).

The article went on to advocate for skills training, vocational education led by the requirements of the jobs available, which I thought was sensible. The truth is, employers are wary of hiring young upstarts with too much academia in their heads and not enough real world experience. It’s desirable, sometimes necessary, to have a qualification to do certain jobs but, as a paper released by the National Centre for Vocational Education Research (NCVER) concludes, there is no significant correlation between being over-qualified and being paid more or deriving more satisfaction from a role.

The paper, ‘Over-education, under-education and credentialism in the Australian labour market’ by Alfred Michael Dockery and Paul W Miller, both from the Curtin Business School at Curtin University, looked at a number of occupations and established a ‘required’ level of education for each. The research then slotted workers into one of three categories: O for over-educated, R for possessing the required level of education, and U for under-educated.

The research shows that for workers who are best matched to their roles in terms of education, the ‘R’s, the wage return is 9% higher. The over-educated workers, the ‘O’s, have a more modest 6% wage return, not much considering the extra effort required. Moreover, Dockery and Miller found: “Workers benefit from being employed in an occupation for which they are under-educated, because the positive effect of being in an occupation with a higher reference level of education outweighs the negative effect of their years of under-education.”

What is credentialism?

The authors also looked at credentialism, which they defined as “an increase over time in the education standards for specific jobs and which is not necessary for the effective achievement of tasks across positions in the labour market”. This basically means an industry or role-driven pressure to have certain credentials even if the role does not necessarily require it to do the job. Jobs in administration, project management and small business operations fit this description.

Fortunately, credentialism has an upward effect on pay, which means job candidates who go to the trouble of acquiring a qualification do get rewarded in higher remuneration. “The years of educational attainment attributable to credentialism are associated with an increase in the hourly wage of the same order of magnitude as the years of over-education,” state Dockery and Miller.

Overall, increasing education levels across the board, particularly in developed countries such as Australia, correlate with rise to a degree of credentialism as demonstrated by a greater proportion of younger workers being over-educated compared to older workers. The authors conclude that although the rewards for extra education are not significant, there is still a “healthy return”, with the additional years of schooling associated with credentialism appear to be linked to the development of skills that attract a reward of around 3-6%.

The other takeaway from this research is more interesting. Dockery and Miller state: “there are large gains that could be potentially achieved through a better matching of workers’ actual educational attainment to job requirements.”

Adopting this line, I believe, would diminish education bloat where students go straight from attaining an Australian Tertiary Admission Rank (ATAR) into an undergraduate degree that they are not suited to, or don’t need for the career they’re after. It would also encourage all candidates, whether school-leavers, mature age learners or career-changers, to take a moment to assess their skills and experience and carefully and confidently choose the education path they need for the career they want.

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