The Global Decline in Occupational Returns to Higher Education

• In Event: Education and Labor Markets

Abstract

Concerns about overeducation and credential inflation have been around since at least the 1970s (Freeman, 1976; Trow, 1973), but the theory of credentialism has never been formalized. In this study, we provide a new conceptualization of credentialism and test it using longitudinal labor force data from over 130 countries. We show that in most countries, absolute occupational returns of university graduates have declined as access to higher education has increased, but relative returns (vis-a-vis high school graduates) increased. This explains why the demand for higher education continues to increase around the world, despite the diminished labor market prospects of university graduates: the alternative—not going to university after completing high school—is even worse, as university graduates crowd out non-graduates even in lower-skilled jobs. We discuss the implications of our findings for social mobility, labor markets, and education policy.

Author

• Rob Gruijters, University of Bristol