policy & reform
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spending
Are we
too long at uni
The return on investment for post-graduate study has been questioned but the evidence shows it pays off – in time. By Mardi Chapman
A tight labour market can encourage people to spend more years at university – earning extra qualifications while competition for jobs is fierce.
An extra year for a combined undergraduate degree or 18 to 24 months for a master’ s degree certainly appear to be an effective use of time.
But are graduates who delay their entry into the workforce by studying longer necessarily getting bang for their buck?
Most people enrol at university with an eye on their future career and higher education experts agree that a degree offers a significant return on investment. Australian and international data has long supported higher employment rates and substantial wage premiums for graduates.
Associate Professor Michael Dockery, director of the Centre for Labour Market Research at Curtin University, says there can, however, be anomalies and
14 | Issue 2 2013 diminishing returns from extra years of higher education.
His research *, based on 2006 Census data and the Household, Income and Labour Dynamics in Australia( HILDA) survey, found people who had the required level of education for their job could expect a wage premium of about 9 per cent for each of those years of education.
Interestingly, even two years at university without completing a degree has an income benefit, he said.
However, people who were overqualified for their job, with qualifications in excess of those necessary for the effective achievement of work tasks, only received a 6 per cent return on those extra years of education.
“ Surplus years still offer a return – the market somehow values those extra years – but the return is lower.”
Postgraduate enrolments increased significantly over the past two decades.
While there is a genuine need for higher educational attainment in some jobs such as those influenced by technological change or globalisation, there is also the risk of over-education.
In an imperfect system, there will always be some mismatch between the level of education required for a position and the qualifications of the incumbent.
Dockery’ s research suggests the overeducated will typically be seen in younger cohorts.
While these graduates may not expect to secure a higher paying job immediately, they would surely hope their extra years of study provide an advantage over other candidates and less time in the job search market.
“ More education can be seen as a signal to employers that you’ ve got what it takes for a higher level position. However, if everyone has more qualifications, then employers aren’ t getting that signal. It’ s just