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Thursday, April 6, 2006

Study: The dynamics of overqualification

1993 to 2001

About one out of every five people in the work force who had a university education was overqualified for their job at some point during 2001, according to a new study. That is, they had worked in a job that required at most high school education.

This study, which examines the phenomenon of overqualification, used data from Statistics Canada's Survey of Labour and Income Dynamics (SLID) to profile individuals who were most susceptible.

Younger workers were more likely to be overqualified, as were immigrants and people who had studied commerce as well as arts and humanities in school. Across industries, overqualified people were most likely to work in the retail/wholesale sector.

On the other hand, the higher the university certification, the less likely workers were to experience a job requiring at most high school education. Others who were less susceptible included unionized workers, those working on a full-time basis and people who had studied sciences and health in school.

For the purpose of this study, an overqualified worker was defined as someone who held a university degree and had worked between 1993 and 2001 in an occupation that required at most a high school education for at least one month.

Overqualification is an important issue for employees, employers and policy makers. On a personal level, it has a psychological dimension. Underemployed university grads often experience the frustration of lower earnings and job dissatisfaction. For the nation as a whole, it represents an underutilization of human capital.

According to the study, the number of university-educated workers who were overqualified for their job increased by nearly one-third between 1993 and 2001. An estimated 331,100 workers had experienced this situation at some point in 2001, up from 251,600 in 1993.

These people accounted for about one-fifth (19%) of all the university-educated people in the work force in 2001, up marginally from 18% in 1993. This share remained virtually unchanged because of an increase in the stock of workers with university degrees between 1993 and 2001.

However, for the purpose of estimating the persistence of overqualification among workers with university degrees, this study took a narrower focus, examining only the group who had "strong attachment" to the labour market. This group worked for more than 4.5 years of the six-year period under study, and spent at least one month in an occupation that required at most a high school education.

The study found that workers who experienced overqualification for at least one month during the six-year follow-up period accounted for 30% of all workers with university degrees. Of course, this is higher than the 18% or 19% for a single year.

A small group of people who were overqualified for most of their time in the labour force were also responsible for a disproportionate share of time spent in overqualification, according to the study.

Those who were overqualified for 100% of their work period accounted for 20% of the ever overqualified workers. However, they accumulated more than 11 million months of overqualification — about one-third of the total months of overqualification accumulated by all individuals during the study period (34 million months).

In comparison, the study examined the group of respondents who held a university degree and who seldom worked in a lower-skilled occupation, that is, for less than 50% of their work period. This group accounted for 66% of the overqualified workers. But they accumulated only 43% of the total time spent in overqualification, about 15 million months.

Younger workers were more likely to work in a position for which they were overqualified. However, older workers had higher chances of remaining overqualified during the entire work period, once they were in an overqualified situation.

Among young people under the age of 30 at the beginning of the six-year follow-up, almost one-half (48%) experienced overqualification at some time during the study period. This was three times higher than the proportion of 18% among older workers aged 50 and over.

Once workers were in a situation in which they were overqualified, the older workers showed a tendency to stay there. In other words, the incidence of being overqualified 100% of the time increased with age.

The study also showed that recent immigrants, those in Canada for 10 years or less, had a higher incidence of overqualification than their Canadian-born counterparts.

More than one-half (52%) of recent immigrants with a university degree worked in a job requiring only high school education at some point during the six-year period. This was almost twice the proportion of 28% among their Canadian-born counterparts. In addition, they were also twice as likely to stay overqualified 100% of the time.

Much of this problem may have to do with recognition of their foreign educational credentials and their workplace experience.

In general, the higher the university certification, the less likely workers were to experience overqualification and to remain always overqualified.

Furthermore, the study found no significant apparent differences of overqualification rates regionally in Canada, even after controlling for other personal and workplace characteristics.

In the West, British Columbia, Alberta, Saskatchewan and Manitoba, 30% of workers experienced overqualification at some point. In Central Canada, Ontario and Quebec, about 28% were in this situation, and in the Atlantic provinces, Newfoundland and Labrador, Prince Edward Island, Nova Scotia and New Brunswick, the proportion was 25%.

Note: This study uses data from two separate panels of 30,000 adults surveyed from the Survey of Labour and Income Dynamics (SLID). The first panel spanned six years from 1993 to 1998; the second panel spanned six years from 1996 to 2001. Data from the first year of follow-up from the first panel was combined with data from the first year of follow-up from the second panel.

Data from the second year of follow-up from the first panel was combined with data from the second year of follow-up from the second panel. The two panels were combined this way for each year of follow-up. Consequently, the study will refer throughout to a "six-year" period of follow-up.

The overqualified worker is someone who held a university degree and had worked at least one month between 1993 and 2001 in an occupation that required at most a high school education. For those that held more than one occupation in a month, the characteristics of their main occupation was selected for the analysis.

Definitions, data sources and methods: survey number 3889.

The analytical article "The dynamics of overqualification: Canada's underemployed university graduates" (11-621-MIE2006039, free) is now available online in the Analysis in Brief series.

For more information, or to enquire about the concepts, methods or data quality of this release, contact Preston Poon (613-951-4245), Income Statistics Division.

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