Trends in the Occupational Returns to Educational Credentials in the Dutch Labor Market: Changes in Structures and in the Association?

Abstract

In this article, we determine changes in the relationship between education and the labor market in The Netherlands since 1960, for which both developments in the distribution of the labor force according to educational attainment and level of occupation (structural changes) and shifts in the mechanism to allocate educated individuals to occupational positions (which modify the net association between education and occupation) are used. To observe both developments, we make use of data from the 1960 Census and four Labor Force Surveys held in 1973, 1977, 1985, and 1991. Loglinear analysis shows that the association between education and occupation has altered. We conclude that changes in the relationship between education and occupation are not only the result of structural changes, but also the outcome of changes in the way educated individuals are allocated to jobs. These shifts in the allocation mechanism are largely connected with the state of the business cycle: in times of high unemployment, employers increasingly select employees on the basis of their education. We also find some support for modernization theory, but as soon as the state of the business cycle is accounted for, the impact of modernization becomes non-significant.

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