Essays on over-education and returns to university quality in the Australian graduate labour market

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Copyright: Carroll, David
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Abstract
Higher education provides access to most professional and managerial labour markets, and produces the knowledge that underpins economic growth. Accordingly, the economics of higher education is an important and growing topic for study. This thesis is comprised of three essays on topics in the economics of higher education, specifically over-education and returns to university quality, in the context of the Australian graduate labour market. The first essay studies the incidence of over-education and its effect on earnings. The results show that between 24% and 37% of graduates are over-educated shortly after course completion, with over-education most common amongst young females and least common amongst older females. Over-education rates vary markedly across major fields of study and appear to reflect the relative demand for graduate labour. Over-education is less common three years after course completion; however a nontrivial proportion of graduates remain over-educated. On the effect of over-education on earnings, young over-educated graduates are not penalised after controlling for unobserved heterogeneity, whereas older over-educated graduates remain at an earnings disadvantage relative to their well-matched peers. The second essay investigates the relationship between job search and over-education. Results from panel estimation suggest that jobs found through university careers offices are associated with a lower probability of over-education relative to jobs found through advertisements and personal contacts. This result arises regardless of gender and age. In contrast, direct employer contact is only beneficial to older males. University careers offices appear to be more effective than other forms of job search at matching the skills of graduates with the needs of employers. The third essay analyses the relationship between university quality and graduates’ starting salaries using a two-stage estimation methodology. The results suggest that average starting salaries for young undergraduates differ significantly across universities after controlling for relevant confounding factors, though the range of university effects is fairly small in relation to other salary determinants, particularly course area. The results are robust to alternative specifications and suggest that employers generally do not place salary premia on attending a high-quality or prestigious university, at least upon workforce entry.
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Author(s)
Carroll, David
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Tani, Massimiliano
Heaton, Christopher
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Publication Year
2015
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Thesis
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PhD Doctorate
UNSW Faculty
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