How might the negative impact of higher education on growth be explained? The role of vertical qualification (mis)match in an MRW‐type model

Abstract

This study explores the impact of higher education on growth in 11 new EU members over the period 2000–2016 using an augmented MRW‐type model which takes into account the quality of education and vertical mismatch. More precisely, it tests whether the accelerating increase of college graduates causes an oversupply of educated labour which, in turn, extends the qualification mismatch and adversely affects growth of per capita income. We find that an increase of the most educated labour force does not per se lead to a higher growth rate. The impact of human capital becomes positive and statistically significant only if graduates with occupations requiring tertiary education are considered in the model. In addition, the econometric outcome implies that the extent of skill mismatch is determined primarily by the rising female population with college education and the gross value added of trade‐related services.

The relationship between knowledge-based economies and economic growth: an empirical analysis on the Asia-Pacific region 2011–2018

“…He claimed that increasing the schooling years, without enhancing cognitive skills, may lead to lower economic growth. Neycheva (2019) advocated that tertiary education can yield a negative impact on growth, owing to skill mismatch. Some graduates are forced to accept jobs that do not match their skills or that require lower education or skills than the level they acquired, contributing to counterproductive behaviours, such as job dissatisfaction and high turnover rates JCEFTS 15,2 (Neycheva, 2019).…”

“…Neycheva (2019) advocated that tertiary education can yield a negative impact on growth, owing to skill mismatch. Some graduates are forced to accept jobs that do not match their skills or that require lower education or skills than the level they acquired, contributing to counterproductive behaviours, such as job dissatisfaction and high turnover rates JCEFTS 15,2 (Neycheva, 2019). Thus, additional years of education may contribute to lower productivity gains and hence education is subjected to diminishing returns to scale.…”