Reaching for the stars and settling for the moon: recent trends in overeducation of US workers 2002-2016

Abstract

ABSTRACT In this study we investigate the educational attainment of the labour force in the United States. Our data analysis, based on Bureau of Labour Statistics data in more than 700 occupations, produced two important findings. First, we observed that the Overeducation Ratio (share of employees that are overeducated), which began to rise in the United States as early as 1970, continued its positive trend in many occupations during 2002–2016. Second, our regression analysis revealed a positive correlation between the overeducation ratio and the median earnings of an occupation. Since a larger overeducation ratio implies that a larger share of adequately educated individuals are crowded out, this result suggests that the displacement of adequately educated individuals is more severe in better paying occupations. Third, we analysed the overflow of graduate degree holders into occupations that require a bachelor’s degree. We observe that graduate degree holders are crowding out the bachelor’s degree holders from better paying bachelor’s occupations. The bachelor’s degree holders, in turn, are crowding out high school graduates from better paying high school jobs.