Level of Education Does Not Translate Into Labor Market Success, Study Finds

11/3/2014 4:56 PM
Category: Economy

According to different theories, education affects people's success on the labor market, whether by providing certain skills or required credentials. A study published by Statistics Estonia shows that Estonia is one of the countries where this correlation is relatively weak and people with higher education have lower chances to earn higher wages than in many other countries.

Researchers from Tallinn University compared Estonia, which has a weakly stratified education system and a neoliberal market economy, with Germany, Finland, Ireland, Hungary and Italy.

The study found that having only a basic education carries a distinct stigma in Estonia: about four fifths of the people who have low educational attainment are blue-collar workers and only a few of them have managed to become a professional or a manager. The authors of the study suggest that this may be due to relatively low number of people who have not earned a high school diploma.

However, there is also a relatively large share of blue-collar workers with secondary or higher education and the difference between these two levels of education is moderate on the whole. This may be due to oversupply of higher education in Estonia.

Moreover, previous studies have shown that the efficiency of higher education differs for various demographic groups in Estonia: the elderly and non-Estonians who hold university degrees are in much higher risk of having to work jobs that do not actually require higher education.

The results also reveal the relatively poor prospects of people with higher education to receive high wages in Estonia. The share of people with higher education who earn much less than the average wage is also rather high. Twice as many people with higher education belong to the three lowest wage brackets in Estonia than in most other countries included in the analyses.

Thus the impact of the level of education on wages is relatively weak in Estonia. The impact factor has also changed very little over the years.

The reasons for this may again be that the expansion of higher education makes it harder to convert higher education into labor market success. The country-specific occupational structure that dictates a low number of professionals and more blue-collar workers means that there are more people with higher degrees than there are positions corresponding to this level of education.

The analysis was conducted by Margarita Kazjulja and Ellu Saar of Tallinn University and is based on the data of the European Union Labor Force Surveys of 2007, 2009 and 2012.


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