Graduate Over-education as a Sheepskin Effect: Evidence from Northern Ireland

This paper examines the nature of graduate over-education amongst a group of applicants to a graduate conversion programme. It was found that whilst a substantial proportion of earnings differentials were associated with a mismatch between individual skill levels and job requirements, wage gaps were still likely to occur should such mismatches be eliminated. The evidence suggests that graduate wage levels are heavily related to sheepskin effects associated with the attainment of jobs with graduate level entry requirements. These sheepskin effects suggest that the process of job categorisation is arbitrary in nature, with stated job requirements somewhat independent of actual skill requirements. The analysis suggests that graduate over-education is better understood within the context of both skill and categorisation mismatches as opposed to skill matches alone.