This paper aims at understanding in which conditions PhD-holders face a problem of overeducation, comparing these highly educated people with the most similar people in terms of education, post-graduates.

The effect of getting a PhD, which costs no less than 3 or 4 years is questionable. Controlling by age and also assuming three or four years more spent on education attainment as an opportunity cost does not change the premium of getting a PhD. The cost opportunity is wider than time in cases where PhD studentship is not subsidised or is planned as training rather than paid scholarship. This cost hence is particularly high for PhD candidates in the UK. Sex appears to be a relevant factor of persistent pay discrimination. Length of employment with current employer is a good predictor of higher salaries, although all these relevant factors do not appear to explain the advantage of having a PhD vs. a Master.

In comparison to the US (Beckhusen et al. 2013; Chiswick & Miller 2009), immigrant with a PhD do not appear to suffer any particular overeducation effect. Possibly UK is able to attract PhD-holders on particularly high skilled level and for specific profile, making the recruitment and appointment phases of labour market efficient for this particular target of workers.

Nevertheless, how the pay-off of being PhD is brought about? We account for position in employment position (var SC20MMJ, see below) which was already used for similar overeducation among graduates (Chevalier et Lindley 2009), industry sector, type of employer, and discipline of one’s background to understand whether there are particular pathways that may explain how a PhD generates an advantage in earning against similar MAs. Channels in getting a job might also play a role in determining a successful or relatively poor employment (Kucel & Byrne 2008; Marini 2022)

Although a higher education, up to the highest level possible like PhD might be preferable to many regards, especially for positive externalities or subjective satisfaction (Canal-Domínguez & Wall 2014), we pose the problem of labour market mismatch – a problem already highlighted in multiple empirical studies (Park et al. 2018; Germain-Alamartine 2019). Industry of destination (Di Paolo & Mañé 2016) has been considered together with education required for position and actual skills required for job a way to detect overeducation – a traditional interpretation (assignment theory) for graduated in overeducation (McGuinness 2006) but only more recently faced for PhD-holders. The UK Labour Force survey does not allow to check skills mismatch, nor R&D intensity (Ermini et al. 2017), which instead is a good predictor in understanding which PhD-holders will be penalised from those who despite working outside higher education will benefit from their title (Gaeta et al. 2018; Gaeta 2015). Yet, horizontal mobility in countries like Italy or the UK are likely to be very different, namely brain-drain and brain-gain respectively. Overeducation in this regard is less likely to be predicted by experiences of moving abroad as found for the case of PhD-holders who attained this title in Italy (Gaeta 2015; Ghosh & Grassi 2020), and more likely to reside on the specific opportunities in a given sector combined with specific position. Oversupply of high skilled is also likely to be a predictor of overeducation in the labour market, as recent data comparing Canada and the US suggest (Lu & Hou 2020) and also more traditional literature points (McGuinness 2006).

Following more generic literature about overeducation, we may pose that some of the missed reward for a higher education (MAs or BAs vs. non-tertiary education or PhDs vs. MAs) might be imputed to endogeneity of overeducation.

For this study, we use the UK Labour Force quarterly survey, which allows to disentangle PhD-holders from Master degrees (var HIGHO). Considering the relatively small number of observations for PhD-holders, namely less than 1000 for one single quarterly wave, we plan to append multiple survey across years to reach statistical robustness. We will keep trace of the wave considered in the new dataset and we will account for inflation, if relevant. This survey allows to check by relevant variables such as single subject of degree (SNGDEGB), industry of destination (IN0792EM or N0792DL), and position in the employment (SC20MMJ), and other variables such as time elapsed from highest education title. Other relevant information according to literature are sex, duration of employment at current employer, channel for getting job, nationality, ethnicity and others. For instance, permanence with the same employer is an advantage, which may be explained as having a similar effect of permanence in the Country for highly-skills immigrants for the case of the US (Chiswich & Miller 2009). We plan to check all these factors (sector of employment, discipline of study and position in the employment) and other confounding factors (the other here mentioned). UK Labour Force surveys indicate in aggregate measures that there is a premium in having a PhD if compared against MA. The connection between wage and required qualification, rather than qualification per se signalled by education is consolidated in literature (Dolton & Vignoles 2000). This premium is particularly wide in public employment. This pattern is consistent both considering total gross income, hourly paid dependent variables, or weekly income over actual worked hours. PhDs appear to have advantages when it comes to refer to preferred worked hours per unit of time, or in case of desire to apply for other positions. Nevertheless, PhDs work on average longer hours. For all these reasons we focus on gross income and on hourly paid salary as the two main dependent variables. At this current stage of analysis we have not spotted relevant differences between these two variables and the respective natural logarithms of them.

We expect to understand in which combination of position in the employment and industry of destination, checking by discipline of background, a PhD has or not an advantage in terms of salary. Possibly, there is a pattern in developing overeducation among PhD-holders against Master post-graduate that is currently under-explored. It is reasonable to believe that on top of aggregated figures we can develop a more thorough interpretations of these patterns. Considering preliminary findings from only April 2021 dataset, we find a statistically significant premium in being a PhD against MA. Nevertheless, other factors are relevant, such as, rank in the employment, industry sector (public eployment and professional and techical sector are both predictor of higher income if compared to work in higher education), continous employment with same employer. Further steps of analysis will consider possible predictors of promotion to higher ranks and/or managerial responsibilities to unpack the dyamic reported in literature about overeducation and skills. Our paper aims at presenting these yet to be fully developed stages of analysis at the time of conference presentation and submission of full paper. Among limitations, we believe that to confine PhD-holders within UK Labour Force dataset constraint the analysis within the UK labour market, failing to understand international mobility of PhD-holders, which is in literature relevant. Also the lack of information about identity of awarding insititution is a minus. Yet, as highlighted in conceptual reflections, overeducation and generally speaking labour market mismatch are not just economical inefficiencies. This phenomenon is likely harbinger and/or reflection of social stratification (Capsada‐Munsech 2017), for which more attention and dedicated research out of secondary data may help shedding light.

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