Tertiary Education Systems and Labour Markets

The opinions expressed in this paper are the sole responsibility of the authors and do not necessarily reflect those of the OECD or of the governments of its Member countries. Division in the Directorate for Education and it complements the analyses being undertaken by the participating countries and the OECD Secretariat. The objectives of the review are to examine how the organisation, financing and management of tertiary education can help countries achieve their economic and social objectives. The focus of the review is primarily upon national policies for tertiary education systems, rather than upon policies and practices at the institutional level. However the management of tertiary education institutions will be relevant to the extent that policies to improve institutional management can help to progress national policies. More specifically, the review will: (i) synthesise research-based evidence on the impact of tertiary education policies and disseminate this knowledge among participating countries; (ii) identify innovative and successful policy initiatives and practices; (iii) facilitate exchanges of lessons and experiences among countries; and (iv) identify policy options for participating nations. Detailed information about the activity is provided in the following internet site: 3 Executive Summary In recent decades, there has been rapid expansion of tertiary-level education across many countries. This report addresses what existing literature can say about the potential consequences of this expansion: Is there now 'over-supply' of graduates? Is there evidence of 'over-qualification' and skill mismatch? Are students studying the 'right type' of subjects at tertiary-level? Is there a shortage of science and technology graduates in particular? Finally, how does type of institution matter for labour market prospects? The labour market consequences of increasing supply can be considered within a simple demand and supply framework. Starting from a position whether the demand for and supply of graduates are equalised, a boost in the supply of graduates should, ceteris paribus, lead to a reduction in the wage premium because employers have a wider range of similarly qualified people to choose from. However, if for whatever reason, employers demand more tertiary graduates, then there may not be a fall in the wage premium. The wage premium depends on the interaction of demand and supply. In recent decades, there has been a big increase in both the demand for and supply of tertiary-educated graduates. There is a controversial literature on reasons for the former, but the predominant view is that 'skill biased technology change' is a …