Job-Education Mismatch Reduces Earnings of Russians by up to 14%

About a third of Russians with higher education do not work in the field that they studied, with this indicator being highest in agriculture and service. Researchers from the HSE Laboratory for Labour Market Studies, together with their colleagues from Portugal, have found out that this job-education mismatch results in a salary reduction of between 7 and 14%. The study was published in the Journal of Education and Work.

Economists distinguish two types of occupation-education mismatch: vertical (when a person performs a job that requires less skills than they have acquired) and horizontal (when a person masters a profession that differs from their major). The vertical mismatch has been well studied, and many researchers note that workers who find themselves in such a situation get noticeably lower salaries.

This new study is dedicated mostly to horizontal mismatch, which can also lead to lower income and reduced job satisfaction. In their study, the economists used the results of a survey of more than 10,000 university graduates, conducted by Rosstat in 2016. It includes data on education and work, as well as the socio-demographic characteristics of respondents who graduated in 2010-2015.

To determine whether there is a horizontal mismatch in each specific case, the researchers relied on both subjective data (respondents' own assessment) and objective data (the match between academic major and field of activity according to international classifiers). In addition, using information about the respondents’ position, the economists also estimated the probability of a vertical discrepancy.

More than half of the respondents (54%) answered that they work in the field that they studied at university. 26% of respondents acknowledged a strong mismatch, with the rest of them selecting intermediate options. It’s worth noting that this indicator is almost the same for both the first and current (at the time of the survey) job.

The connection between mismatch and salary is clear: the smaller the occupation-education mismatch, the higher the income. Those who indicated that they work almost in their studied specialty receive on average 7% less than people with a perfect match, while those who chose the answer ‘not really working in a field related to my major’ — 11% less, and people with a complete mismatch — 14.4% less. This relationship manifests itself in both an objective and subjective assessment of the mismatch (in the first case, the mismatch between education and work leads to a salary reduction of 11%).

Those who studied medicine, natural sciences, exact sciences, IT and pedagogy have the lowest probability of a horizontal mismatch. Those who studied the tertiary sector and agriculture have the largest probability of doing a job unrelated to their education.

This partially confirms the assumption that those who receive more specific knowledge and skills in demand only in one area, are more connected to their major, and this is most clearly manifested in medicine. Those who get more general, universal skills, change their field of activity more easily. In addition, people whose educational field doesn’t suggest a generally high salary, are more likely to change their profession. Interestingly, women are more likely to work in the field they studied.

The researchers divided the fields of study into two groups. The first group includes those subjects that allow you to accumulate specific human capital. Classic examples of this type of specialist include medical workers, as well as lawyers and engineers in certain specialized types of industries (for example, nuclear power). If graduates in these fields of training do not work in the field they studied, there is a significant depreciation of the human capital that they acquired during their studies, and this is seen to be a negative phenomenon. Fields from the second group allow you to acquire so-called common human capital, which can be used equally effectively in various professions.

It's no secret that historians make some of the best journalists, mathematicians make strong economists, and engineers make good IT specialists. For such specialties, the main indicator of efficiency should be salary, because if a graduate is in demand in the labour market and is highly paid, this indicates that they have received a sought-after major.

Victor Rudakov
The study author, Deputy Director of the Center for Institutional Studies, Assistant Professor at the Department of Applied Economics

20% of the respondents have both a horizontal and vertical mismatch, and this is the one of the highest results among countries in the Organization for Economic Cooperation and Development. At the same time, there are not so many people with only a horizontal mismatch — 11%, close to the OECD average.

The researchers state that the labour market is developing rapidly, production technologies are changing, new professions are constantly emerging, old ones are gradually disappearing, and if you study a very specific field and one specific technology, then by the time you graduate, the technology may have changed, and your knowledge will have become obsolete.

We should gradually abandon the narrative about specialisation, and talk about certain broad areas of training, knowledge, skills and competencies that university education can provide, and develop various programmes of additional training and retraining both in the workplace and in universities.

Victor Rudakov
The study author, Deputy Director of the Center for Institutional Studies, Assistant Professor at the Department of Applied Economics

IQ

Author: Alyona Manuzina, December 15, 2022