Education levels have increased in Israel and around the world in recent decades. There is a common perception that this increase leads to “overeducation;” a situation in which the education level of an individual exceeds the skill-level required for the job in which the individual is employed. This study examines overeducation in Israel including its scope and causes behind the phenomenon.
Overeducation in Israel
The study uses data collected from the 2015 to 2019 Israel Social Survey (ISS) conducted by the Central Bureau of Statistics (CBS), to analyze the phenomenon of overeducation among Israeli workers with an academic degree employed in occupations that do not require academic education.
- Between 2017 and 2019, about 17.5% of Israeli workers with an academic degree were classified as overeducated.
- Overeducation is more prevalent among people who studied humanities and the social sciences, while those who studied law, medicine, math, statistics, and computer science have a very low propensity to be classified as overeducated.
Causes of overeducation in Israel
The study reveals several factors that strongly affect the scope of overeducation – language, changing jobs at an older age, and commuting.
Language skills are a key component of human capital and a critical factor for successful integration into civilian life and the labor market. Thus, people with language proficiency have a greater chance of finding a rewarding job that matches their skill set while, on the other hand, those who suffer from a language barrier may end up working in a profession that does not require an academic degree and be classified as overeducated. The study finds that in Israel:
- The level of Hebrew-language proficiency for those who immigrated before adolescence is almost the same as for Jews born in Israel, while for older immigrants who received most of their education abroad, language acquisition is more complex.
- Nearly one-fifth of Arab Israeli degree holders studied outside of Israel, and the share of those proficient in Hebrew among them is lower than among the Arabs who studied in Israel: 74% versus 93% in 2017-2019.
- Young workers (25–44) with a strong command of the Hebrew language were found to have lower rates of overeducation, with negligible differences between immigrants and native Israelis (Jews and Arabs).
- High rates of overeducation were found among immigrants who acquired their education abroad – both young and old – who immigrated after 1996.
Overeducation stemming from poor language skills may be perceived as par for the course when talking about immigrants who arrive at an older age, but is problematic when it comes to younger immigrants who have many years of work ahead of them.
Age and job tenure
In general, overeducation is more common among young people at the beginning of their careers who do not yet have appropriate professional experience and, in order to avoid unemployment, turn to occupations that do not match their education level. It is expected that over the years, workers will improve the degree to which their profession and education level match, yet there are also findings that show that, for some workers, overeducation can have a negative and lasting effect on wages and wage growth relative to those working in occupations commensurate with their education levels.
Overeducation could also be related to the personal circumstances of the individual employee, which are often affected by age. These include geographical restrictions, marital status, and older workers wanting to change their employment patterns to improve quality of life. The study finds that in Israel:
- The rate of overeducation is higher among graduates of higher education at the beginning of their careers, but that at more advanced career stages, the match between education and profession increases with the years.
- At the same time, workers who change jobs after the age of 45 are more likely to be classified as overeducated as the years go by. It’s possible that this is due to more pronounced skills obsolescence among older workers because of the intense pace of technological changes, lack of awareness about new skill requirements, and lack of appropriate training, or that it is due to ageism (employment discrimination on the basis of age).
The length of time required to commute to work may explain the phenomenon of overeducation, because job seekers’ behavior is greatly affected by their spatial flexibility. A worker who is willing to relocate or who has a high tolerance level for commuting is less likely to be overeducated. The study finds that in Israel:
- Overeducation rates decline as commuting times increase.
- Relatively low rates of overeducation were found among workers who travel to work by car or train (14%-15%), while double that rate was found among workers commuting by bus (28%).
- Those who are overeducated are less satisfied with their place of employment as well as their income relative to workers with education levels commensurate with their employment, but are more satisfied with commute-time.