Press Release: Overeducation Among Academic Degree Holders in Israel

Under embargo until Tuesday (8.12) at 6:00am

Education levels have increased in Israel and around the world in recent decades. There is a common perception that this increase leads to “overeducation;” a situation in which the education level of an individual exceeds the skill-level required for the job in which the individual is employed.

A new Taub Center study conducted by researcher Haim Bleikh examines overeducation in Israel and finds that, in recent years, about 17.5% of those with academic degrees are estimated to be overeducated. The phenomenon is most notable among young immigrants with poor Hebrew-language skills, who were educated abroad and have many years of work ahead of them, and among workers who changed their place of work after age 45. A correlation was also found between overeducation and commuting patterns: the extent of the overeducation phenomenon decreases as commuting time increases, and is significantly lower among private car owners.

Given the elevated enrollment rates in higher education since the onset of the coronavirus crisis, it is possible that this phenomenon will expand further in the coming years.

The new Taub Center study looks at academic degree holders employed in occupations that do not require a degree. Bleikh finds that such overeducation is more prevalent among people who studied humanities and the social sciences, while those who studied law, medicine, math, statistics, and computer science have a very low propensity to be classified as overeducated. Bleikh also found that in recent years about 17.5% of workers in Israel with an academic degree are classified as overeducated.
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There is a high share of overeducated among immigrants and workers who changed jobs after age 45

The Taub Center study reveals several factors that strongly affect the scope of overeducation – language, seniority in the workplace, and commuting.

Language skills are a key component of human capital and a critical factor for successful integration into civilian life and the labor market, and a lack of proficiency in Hebrew can be an obstacle in career development and can impair earning potential. Knowing the language is important for acquiring higher education and opportunities in the labor market and, at the same time, participating in academic studies strengthens language skills. Thus, people with Hebrew-language proficiency have a greater chance of finding a rewarding job that matches their skill set while, on the other hand, those who suffer from a language barrier may end up working in a profession that does not require an academic degree and be classified as overeducated.

Age of immigration and exposure to Hebrew language greatly affect the level of proficiency. The level of language proficiency for those who immigrated before adolescence and received most of their education in Israel is almost the same as for Jews born in Israel, while for older immigrants who received most of their education in their country of origin, language acquisition is more complex and depends on personal skills, the investment of time, and effort.

For older immigrants, the level of language proficiency may come at the expense of their livelihood. As for the Arab Israeli population, nearly one-fifth of degree holders in this population studied outside of Israel, and the share of those proficient in Hebrew among them is lower than among those Arabs who studied in Israel (74% versus 93% in 2017-2019).

In general, Hebrew proficiency is correlated with lower levels of overeducation in all population groups. Young workers (25–44) with a strong command of the Hebrew language were found to have lower rates of overeducation, with negligible differences between immigrants and native Israelis (Jews and Arabs). On the other hand, high rates of overeducation were found among immigrants who acquired their education abroad – both young and old – who immigrated after 1996. Overeducation stemming from poor language skills may be perceived as par for the course when talking about immigrants who arrive at an older age, but is problematic when it comes to younger immigrants who have many years of work ahead of them.
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Overeducation is more common among young people at the beginning of their careers who do not yet have appropriate professional experience and, in order to avoid unemployment and its consequences, turn to occupations that do not match their education level. However, it is expected that over the years, workers will improve the degree to which their profession and education level match. Nonetheless, there are also findings that show that, for some workers, overeducation can have a negative and lasting effect on wages and wage growth relative to those working in occupations commensurate with their education levels.

Overeducation could also be related to labor market conditions and the personal circumstances of the individual. Geographical restrictions (such as a place of residence far from employment centers and a lack of mobility) and marital status may also push educated workers to work in professions that do not require an academic degree. These factors could be affected by the age of the employee, including older workers who choose to change their employment patterns to improve their quality of life or make time for other activities.

The data show that the rate of overeducation is higher among graduates of higher education at the beginning of their careers, but that at more advanced career stages, the match between education and profession increases with the years. In contrast, workers who change jobs after the age of 45 are more likely to be classified as overeducated as the years go by. It is very possible that the intense pace of technological change, as well as a lack of new skills and ongoing training, may cause some people to accept employment in jobs that do not match their level of education.

Another factor that contributes to the phenomenon may be ageism (employment discrimination on the basis of age). “In light of the coronavirus crisis, many workers ­– young and old – were furloughed or fired, so there may be educated workers who, due to the state of the labor market and their personal economic situation, will apply for jobs that do not require an academic degree,” says Bleikh.

Rates of overeducation decrease as travel time to work increases

The length of time required to commute to work may explain the phenomenon of overeducation, because job seekers’ behavior is greatly affected by their spatial flexibility. A worker who is willing to relocate or who has a high tolerance level for commuting is less likely to be overeducated. The Taub Center study finds that overeducation rates decline as commuting times increase. As for the means of commuting, low rates of overeducation were found among workers who travel to work by car or train (14%-15%) and double that rate was found among workers commuting by bus (28%).

The high dependence on cars in Israel indicates that these improve people’s spatial mobility. In particular, the mobility of a private car allows job seekers to expand their search radius, thus increasing the number of workplaces to which they can apply, thereby reducing their chances of ending up in a job for which they are overeducated.

“Expanding work from home could be a way to extend opportunities in the labor market for workers who live far from employment centers and would need to travel long distances to get to work, and for employers it could expand the supply of workers – thus mitigating the effects of overeducation that stem from geographical restrictions,” says researcher Haim Bleikh.

The relationship between commuting and overeducation is also related to worker satisfaction

with commuting time, income, and place of employment. Those who are overeducated are less satisfied with their place of employment as well as their income relative to workers with education levels commensurate with their employment, but are more satisfied with commute-time. This shows that some workers choose to compromise on their place of work in exchange for shorter commute times and lower commuting costs.

Bleikh notes that “in an age where commutes are getting longer, the costs of commuting become a highly influential factor in choosing a workplace for some workers.”

In an examination by gender, overeducation is found to be more prevalent among women, by a gap of about 3 percentage points. This may be due to women’s tendency to attribute more weight to occupational characteristics that make it possible to balance work and family. For example, 61% of married women with an academic degree work within a half-hour drive of their place of residence, compared to 49% of men.

Bleikh explains that: “Graduates of higher education are generally employed at higher rates and have higher incomes and better health. On a macro level, investing in higher education contributes to increased productivity and economic growth. Yet in Israel about one in six academics are classified as overeducated, suggesting that the private and public resources invested in the acquisition and accessibility of higher education are not well utilized in the labor market, and that the social return on the investment for these workers is essentially small.

Though it is commonly thought that choice of profession and the institution of academic study have a significant effect on the chances of being overeducated, the phenomenon of overeducation is multi-dimensional and is affected by a variety of other variables.”

Taub Center President Prof. Avi Weiss says: “Higher education is important for integration into the labor market, but it is also important to adjust education levels to fit employment characteristics and the needs of the market in order to get the most out of workers and increase labor productivity. Since the outbreak of the coronavirus crisis and the closing of the skies to air travel, many young Israelis have been enrolling in higher education. This may increase productivity and improve the occupational situation of many young Israelis, but it may also expand the phenomenon of overeducation in the coming years.”

The Taub Center for Social Policy Studies in Israel is an independent, non-partisan socioeconomic research institute. The Center provides decision makers and the public with research and findings on some of the most critical issues facing Israel in the areas of education, health, welfare, labor markets and economic policy in order to impact the decision-making process in Israel and to advance the well-being of all Israelis.

For details, or to arrange an interview, please contact Anat Sella-Koren, Director of Marketing, Communications and Government Relations at the Taub Center for Social Policy Studies in Israel: 050-690-9749.