The paper examines the rapid expansion of higher education (HE) in Europe since the last decades of the 20^th century, which is also fostered by European politics, striving, inter alia, for more social equality by allowing larger parts of the population to obtain HE. The paper analyses the recent development of tertiary education rates across Europe and conducts an international comparative analysis regarding the relation of graduate rates and the demand for graduates in the labour markets. This analysis is done within the theoretical frameworks of a hypothetical dynamic balance (labour market equilibria) between the shares of highly educated workers on the labour markets and related qualification structure of labour forces in respective countries and five generic EHEA regions.

Higher education is a complex societal system that has many functions and one of them is the supply of qualified specialists to the labour market; thus, one can speak of more balanced or less balanced situations on national and regional markets of labour forces. As at any market place, the two sides of the supply and demand equation are the dynamic factors. At each given point of time and at each particular location, whether at national or regional levels, these factors constitute a dynamic equilibrium, which is taken as a given reality by all actors on this market. Using the conceptual language of game theorists, these equilibria can be perfect or imperfect ones. In the case of an imaginary perfect equilibrium on the labour market, one has a quantitatively and qualitatively balanced supply of and demand for professionals and specialists. In the case of an imperfect equilibrium, or, to be more precise, of imperfect performance equilibrium, one deals with the situation when the supply of highly educated specialists either exceeds the real needs of the related niche on the labour market, or is below the market demand. In the cases of perfect equilibria, the system is stable or stagnant, while in the case of an imperfect equilibrium the system becomes more dynamic and gains a momentum of change.

The study operates with statistical data from UNESCO and ILO databases for a sample of 44 countries of the EHEA, as well as the USA as a reference country. results of the empirical study show the general prevalence of the demand for graduate workers over the supply of tertiary graduates for most European countries, except for several Post-Soviet countries. The authors conclude that ‘universal HE’ – participation rates where at least 50% of the relevant age group enters tertiary education (Marginson, 2016 & Trow 2010) – should be understood as the preferred development only under certain conditions. These conditions are, inter alia, as follows: (a) sufficient demand for graduates on the labour markets and (b) preservation of the overall quality of professional education and training.  It should be also remarked that in some countries, the HE enrolment has risen up to 75%, as is the case, for instance, in the USA, Russia and some OECD countries in the southern and northern regions of the European Education Area.

In this paper we interpret the term “perfect equilibrium” as a formal statistical feature that stands in a logical opposition to “optimal equilibrium”. A perfect equilibrium could be understood as an ideal (“imaginary”) model and not as an optimal balance. In this sense, the former should be seen as a statistical or theoretical abstract, when supply and demand on the labour market are equal. In case of an optimal equilibrium one should assess whether or not such a balance would enable the most successful social and economic development of a country.

The European Higher Education Area (EHEA) is highly diversified and includes countries with very different national education systems, as well as different levels of socio-economic development. Accordingly, one can expect considerable variability in the overall supply-demand balances across countries and geographical regions. The authors test the hypothesis of “excessive” higher education for each EHEA country based on empirical data. To measure the matching occupations for tertiary graduates, we use an aggregate definition of the theoretically suitable professional occupations. The top-professional occupations are united into a super-cluster of three major occupational groups that unites “managers”, “professionals” and “associate professionals” (ISCO groups 1, 2 and 3). As a matter of methodological assumption, the structure of occupations requiring higher qualifications (per country) is taken as a hypothetical demand side. The other side of the equilibrium is represented by the achieved rates of educational attainment of the population in respective countries, statistically counted as all people with tertiary education (ISCED level 5 and higher). We assume the suggested indicators to be the best possible proxies to measure quantitative parameters of the labour market’s qualification structure. In order to capture the quantitative educational/occupational relation, we constructed the coefficient EDOCAR (“Education/occupation adequacy ratio”) calculated for each country or cluster and time period by dividing the rate of the cumulative HE attainment of the adult population through the share of labour forces in the top-three segments of occupational hierarchy that require the highest education. The coefficient equals 1.0 in the case of the full quantitative correspondence of the labour market “demand” for the qualified work force and the educational “supply” of graduates. In terms of market economics and the game theory, this is a situation of an ideal statistical perfect equilibrium (not to be confused with an “optimal equilibrium”. Coefficient values smaller than 1.0 mean that there is an unsatisfied demand for qualified graduates; in case the value exceeds 1.0, one can speak of a certain “overproduction” of graduates – the labour market cannot absorb all qualified workers for the corresponding advanced positions.

The growth in significance of educational certificates takes place in countries where demand for qualified workers exceeds the corresponding supply. Many researchers assess the “educational certificates” as an asset that stands for a specific currency on the labour markets that can be assessed within the frameworks of theories of human capital. In this sense, once can interpret the related educational dynamics using the vectors that would designate inflationary and deflationary vectors on these markets. Counter-posing the statistics on educational attainment with structural data of the labour markets has shown that the rapid expansion of HE in the EHEA since the late 1990s occurs independently of the steady and slower growth of the related structural occupational demands. Thus, one can conclude that the growth of tertiary education enrolments and the resulted cumulative attainment of the population are generally caused by reasons beyond the mere labour market supply-demand model. The grounds for the educational growth have to be sought in the wider societal contests, such as individual or familial aspirations to possess an advantageous social and cultural good in a form of an advanced educational credentials, and/or efforts on inequality reduction with policies aiming at widening access to HE degrees, and/or the growing global economic competition stimulating the strategic development of HE across the world, etc. Thus, if the term inflation as a legitimate label for the declining social or economic value of higher education credentials (alongside with their formally constant nominal values), then the closely nested terms deflation and stagflation can be deployed for the analysis of educational dynamics in the contexts of supply-demand equilibria of labour markets. Besides, one should take into consideration also the opposite phenomena, such as inflation, deflation and stagflation of skills that are required and working places.

Beck, U. (1992). Risk society : towards a new modernity. London, Sage. Beja, A. (1992). "Imperfect equilibrium." Games and Economic Behavior 4(1): 18-36. Chvorostov, A. and N. Waechter (2020). "National and Regional Balances of Qualifications and Occupations in the EHEA." Sociological Studies 2022(3): 78-90. (doi 10.31857/S013216250008805-8) Chvorostov, A. and N. Waechter (2025). "Rapid expansion of tertiary education and regional labour market equilibria in the EHEA and its major European regions: graduates and their tentative jobs (observation of trends 1970s to 2010s)." Journal of Innovation and Entrepreneurship 14(1): 140. https://link.springer.com/article/10.1186/s13731-025-00607-4 Collins, R. (2023). "Credential Inflation Makes College Degree Not Worth The Cost." The Sociological Eye Blog (05 September 2023). Dore, R. (1976). The diploma disease : education, qualification and development. London, Allen and Unwin. Henseke, G. and F. Green (2016). "Graduate Jobs" in OECD countries: Analysis Using a New Indicator Based on High Skills Use. OECD Education Working Paper, OECD Directorate for Aeducation and Skills. No. 144. Husen, T. (1987). Higher education and social stratification : an international comparative study. Paris, UNESCO. Little, A. W. (2006). The Diploma Disease. The Elgar Companion to Development Studies. D. A. Clark, Edward Elgar Publishing. Marginson, S. (2016). "High Participation Systems of Higher Education." The Journal of Higher Education 87(2): 243-271. Trow, M. A. (2010). Twentieth-century higher education : elite to mass to universal. M. Burrage. Baltimore (Md.) :, Johns Hopkins University Press. Verhaest, D. and E. Omey (2006). "Measuring the Incidence of Over- and Undereducation." Quality and Quantity 40(5): 783-803.