Tuesday, October 14, 2008

Can PhD Graduate Labour Supply Create Its Own Demand?

"Mapping the PhDs in the Private Sector" is the title of a new literature review by Susanna Stén, who is based at the Research Institute of the Finnish Economy. The review maps out the labour market situation of PhDs employed in the private sector. According to the author, the potential benefits of companies employing PhDs can be divided into productivity and innovation effects as well as knowledge contributions from networking, and external effects. The Finnish literature shows that the private sector employs only about 15% of all PhDs in the Finnish labour market.

Apparently the rapid increase in graduating PhDs in recent years indicates that the employment patterns of PhDs might be changing. "Further research is needed to answer questions like: How has the increased supply changed the labour market situation of PhDs? Has the role of the private sector as an employer of PhDs changed? And is the allocation of PhDs between fields of study efficient?" Similar issues were placed in the Irish context last year by myself, Liam and Colm - in this B&F article: "Building Up The PhDs".

Apparently Ireland's R&D manpower, in terms of full time equivalent (FTE) researchers per 10,000 labour force (49), is below the EU-15 average. This is according to the Singapore Agency for Science, Technology and Research. Information is available here and in the diagram below. Ireland's position is third from the right hand-side. The position of the EU-15 average is at the far right-hand side.

A question arises - what kind of R&D manpower does Ireland need outside the academic and public sector? One approach is to estimate the need for PhD graduates in the private sector via a survey of employers. Some things we do know (from research conducted by Eamonn O'Raghallaigh at Life Science Recruitment) are that:

(i) employment in the pharmaceutical/chemical sector has increased by 56% over the last 10 years, and there is currently over 24,500 employees within the sector.
(ii) In the medical devices/biotechnology sector, some 140 companies employ over 26,000 employees.
(iii) exports in the pharmaceutical/chemical sector totalled €43.5 billion in 2007; this represents 49% of total Irish exports
(iv) the medical devices/biotechnology sector saw a slight downturn in 2007, with exports falling by 2% to €3 billion

A leading education economist (Anna Vignoles) argued last year (here) that universities should set student tuition fees according to how much a degree subject is valued by employers. An interesting first step might be to see if such information can be gathered from employers. If it was subsequently estimated that there is not much need for more PhD graduates in the private sector, then one implication might be to consider ways of stimulating demand for R&D manpower. But the first step is to get the demand-side information.

1 comment:

Martin Ryan said...

The more I think about it, it really would be interesting to assess the job satisfaction of Ph.D. graduates in the private sector in Ireland. After all, the private sector includes a multitude of positions in which a 'doctor' could be very well or badly matched to their Ph.D. training. It is suggested in the literature that this could have a substantial effect on the job satisfaction of Ph.D. graduates.

To illustrate why this might be the case, we consider Borghans et al. (2000), which shows that workers holding a job unrelated to their field of education suffer significantly diminished earnings. In addition to economic reasoning, psychological theories of expectation suggest that the under-utilization of skills is a cause of diminished job satisfaction (Bender and Heywood, 2006). Tsang and Levin (1985) and Clark and Oswald (1996) have shown that those with the greatest education and skills have the highest expectations for their jobs and careers and are more easily disappointed. Allen and van der Velden (2001) and Bender and Heywood (2006) confirm that under-utilized skills and are associated with significantly diminished job satisfaction.

Bender and Heywood (2006 - Educational Mismatch Among PhD's: determinants and Consequences) use the US Survey of Doctorate Recipents to examine mismatch; they ask the following question: "Thinking about the relationship between your work and your education, to what extent is your work related to your doctoral degree?" The possible responses are "closely related," "somewhat related" and "not related." They find this measure of mismatch to be highly associated with job satisfcation.

In addition to mismatch, there are other factors which may affect Ph.D. graduate reports of job satisfaction. In their paper, “Job Satisfaction of the Highly Educated”, Bender and Heywood (2006) report that the job satisfaction of Ph.D. level scientists in the United States is affected by gender - female scientists report lower job satisfaction than males in academic settings (but higher job satisfaction than males in non-academic settings). It may be the case that female Ph.D. graduates have higher expectations for what constitutes job satisfaction when they are working in the academic sector.