Underemployment of college graduates: is doing anything better than doing nothing?

Study Context

In most low-income countries, unemployment among people with an advanced education is higher than unemployment among those with basic education (World Bank, 2021). In Burundi, youth unemployment in the former category  was last estimated at 41% in 2014 (ILO, 2021). For new job seekers with an advanced degree, there may be advantages and inconveniences of taking up low-skill jobs. Using a set of field experiments, this project aims to elicit preferences of employers and job seekers with respect to low-skill job experience, as well as examine the impact of nudging graduates into a low-skill job search strategy on labor market, socio-economic, and psychological outcomes in Burundi.

This pilot study will focus on the following research questions:

1. Do graduates underestimate the value of low-skill job experience?
2. Does low-skill job experience in the absence of immediate high-skill employment lead to better labor market outcomes?

Study Design

Employer Preferences:

Through an audit study, the research will elicit preferences of employers. Forty private employers will each evaluate twenty CVs using an Incentivized Resume Rating approach that will demonstrate low-skill preference by sector, and what aspects of low-skill experience employers value.

Next, two sets of CVs will be created based on graduates’ actual CVs: 1) one set will mention no experience in low-skill jobs, 2) the other will reflect the first group but have the addition of low-skill experience. The CVs will then be evaluated by different hiring managers using a ten point Likert scale on their interest in hiring the candidate, the likelihood of a candidate accepting a job at the firm, and the likelihood of accepting the starting salary if the candidate is offered the job (provided by the hiring manager).

There are three potential outcomes of the audit study: 1) employers value low-skill experience; 2) employers are indifferent to low-skill experience; or 3) employers do not value low-skill employment.

Graduate Student Preferences:

If employers value low-skill experience, the next phase of the study will be to elicit preferences of graduates by randomizing registration in an employment agency.

Two hundred recent graduates who studied Economics and Management at the University of Burundi will be randomized either into a group that will receive information about employers’ preferences regarding low-skill experience or a group that will not receive any information about employers preferences. Both groups of graduates will then be randomized into either a low-skill or high-skill job database.

The short-term outcome of interest will be graduates’ show-up rate to the employment agency, (as a measure of job seekers’ preferences). The final outcomes will include acceptance of employment, earnings, and satisfaction.

Results and Policy Lessons

Results indicate that mentioning a low-skill experience on a resume increases the hiring interest of employers. However, researchers did not find gender discrimination at an early stage of the hiring process. Post experiment interviews reveal that employers perceive people with low-skill experience as hard working, disciplined and persevering individuals rather than individuals with financial difficulties, incompetent or less qualified compared to classmates.The study’s results have implications for job seekers and organizations advising them, highlighting the importance of considering low-skill experiences and encouraging diverse opportunities regardless of gender.