Tracking graduate skills demand

The share of graduates in the British workforce more than doubled between 1995 and 2020. Using worker-reported job task data from the Skills and Employment Survey 1997-2017, this presentation develops, validates and deploys a novel index of graduate skill use to assess the state of the graduate labour market in Britain. Changes in job tasks drove the expansion of degree requirements until 2006 but decoupled during the period of the Great Recession. Compared with 1997-2006, the growth of graduate skill use slowed over 2006-2017. Nonetheless, typical graduate skill use by education level remained remarkably stable over 1997-2017. To estimate the wage returns to graduate skills use, we develop a pseudo-panel analysis that accounts for the close relationship between tasks and individual skills. Relying on differential exposure to task-biased technological change, we identify a substantial return to graduate skill use. According to the estimates, differences in graduate skills use explain 80% of the typical wage gap between graduates and non-graduates.