Overeducation could land you with lower wages for a decade

Embargoed until: Publicly released: 2026-06-16 08:44

New Zealand

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More than half of NZ's university graduates are overeducated, and they're being hit with a wage penalty because of it, new research shows. The study found that overeducated graduates earn 6.7% less than well-matched colleagues, and they can continue to earn less for at least a decade. The researchers say their findings challenge the idea that overeducation is temporary, and that we need university courses that better align with actual job demand.

News release

From: Dr Min (Martin) Bai, University of Waikato (and author of this research), comments:

"Our decade-long study of over 510,000 New Zealanders has found that workers in jobs beneath their education level earn 5% less than well-matched colleagues, and this penalty persists for at least ten years.

"Using census data from 2013, 2018, and 2023, we found that 54% of graduates are overeducated, stuck in roles that don't require their degrees. These graduates face a steeper 6.7% wage penalty, while undereducated workers (those in jobs above their qualification level) earn a 2–4% premium.

"The findings challenge the idea that overeducation is temporary. Most workers remain mismatched across years, suggesting deeper structural issues in New Zealand's labour market.

"My Ph.D student, Ishari Madukala, and I note the findings raise questions about the return on investment in higher education. We call for better career guidance, stronger employer-university partnerships, and strategic reviews of university funding to align graduate skills with actual job demand."

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Research Elsevier, Web page

Journal/
conference: International Journal of Manpower

Research:Paper

Organisation/s: University of Waikato, University of Sri Jayewardenepura, Sri Lanka

Funder: N/A

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