Full research (in Hebrew)​
  • Approximately 14 percent of undergraduate degree holders in Israel are employed in situations of over-education (in which the 
  • number of years of the employee’s study is greater than the average among those employed in that occupation). The share of graduates that are mismatched between their major subject and their occupation is approximately 40 percent.
  •  Bachelor’s degree graduates of public colleges in Israel have the greatest probability of being overeducated and mismatched in the first years after graduation, followed by university graduates (3–6 percentage points less). The lowest probability is among graduates of private colleges (8–9 percentage points less than graduates of public colleges).
  •  Highly skilled workers (based on “Bagrut” matriculation test scores), graduates of subjects with strong labor market affiliation, public sector employees, and those with experience in the labor market, have a lower probability of being overeducated and mismatched than others in the first years after graduation.
  • Over-education is correlated with a gross annual wage that is approximately 17 percent less than that of workers whose level of schooling is in line with their occupation. Mismatch between major subject and occupation is correlated with a wage that is 5–6 percent lower.

 

Over-education is a situation in which the number of years of an individual’s formal schooling is greater than required for performing the work. Another phenomenon, related to over-education, is mismatch between individuals’ occupation and the subject in which they majored. Both phenomena have a negative impact on the employee, employer, and the economy. The accelerated expansion of colleges since the 1990s, which contributed to a marked increase in the number of higher-education graduates in Israel, likely increased the magnitude of those phenomena.

 

Research conducted by Idan Lipiner, Dror Rosenfeld, and Noam Zussman of the Bank of Israel’s Research Department examined the probability of higher-education graduates in Israel to be employed in situations of over-education and mismatch between their occupation and the subject in which they majored, based on types of institutions and subjects of study, and after controlling for the effect of additional variables that could have led to such situations. They used data on all Bachelor’s degree graduates born between 1978 and 1985, which include a range of their and their families’ demographic-social-economic background characteristics in 2008, their “Bagrut” matriculation exam results, the academic fields they studied, their occupations, and wage levels.

 

Based on the 2014/2015 PIAAC survey of adult skills, the share of Bachelor’s degree holders in a situation of over-education is around 14 percent. The share of those that are mismatched between their major subject and their occupation is approximately 40 percent. Estimations indicate that after controlling for major subjects and demographic-social-economic characteristics of the graduates (up to age 30), the graduates with the greatest probability of being overeducated and mismatched are those of public colleges, followed by university graduates (3–6 percentage points less); the lowest probability of being overeducated and mismatched is among those of private colleges (8–9 percentage points less than graduates of public colleges). However, it is important to note that studies at public colleges benefit their graduates, including increased higher wages relative to those of high-school graduates.

 

Highly skilled workers (based on “Bagrut” matriculation test scores), graduates of subjects with strong labor market affiliation (for example, accounting, law, computer science, and engineering), public sector employees, and those with more experience in the labor market, have a lower probability of being overeducated and mismatched than others.

 

After taking into account the demographic-social-economic characteristics of the graduates aged 23–37, over-education is correlated with a gross annual wage that is approximately 17 percent less than that of workers whose level of schooling is in line with their occupation, with no gender differences. Mismatch between the major subject and the occupation is correlated with wages that are 5–6 percent lower for men and women.​

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