1. 1 1 Supply of Labour by Education Dennis Fredriksen, Hege Marie Gjefsen and Nils Martin Stølen Statistics Norway European Meeting of the International Microsimulation Association Dublin, Ireland, May 17-19 2012

2. 2 Background Most OECD-countries –Increased demand for high-skilled labour –Reduced demand and higher unemployment for low-skilled –Increased wage differences Norway –Also increased demand for high-skilled and reduced demand for low-skilled –Smaller differences in wage and unemployment rates –Probably reflecting strong growth in supply of high-skilled

3. 3 Employment by level of education 1972-2007. 1000 persons

4. 4 Hourly wages by educational level Percent of hourly wages for workers with higher tertiary education

5. 5 Planning models to project supply and demand for labour by education Main aim: Avoid severe imbalances in the future Demand side: –Employment in different industries projected by macroeconomic models –Only possible to handle a classification by few kinds of education in a macroeconomic model –Further division in a sub-model assuming that trends in changes in the shares of education continue Supply side: –A dynamic microsimulation model is an efficient tool in analysing and projecting supply of labour by education

6. 6 Education classified by level is included in most dynamic microsimulation models Dynamic microsimulation opens for far more flexibility compared to traditional cohort component methods Able to handle more detailed classification of education in combination with classifications along other dimensions Education important for the probability to work, kind of work, level of earnings and retirement Traditions for projecting population by education i Norway since the 1970s Analysed and projected by the dynamic microsimulation model MOSART since the beginning of the 1990s

7. 7 Education in the dynamic microsimulation model MOSART 5 main levels of education subdivided into educational fields A total of about 30 educational groups in the model Reflecting the flexibility of the Norwegian educational system and movements from education to labour and vice versa A complicated educational behaviour is also complicated to analyse

8. 8 Educational choices included in MOSART To enter education To enter a specific field To remain in education To complete education To have educational attainment updated without being in education All the choices modelled by logistic regression –Educational choices explained by age, gender and earlier education

9. 9 The path through the model of education

10. 10 Population projected by level of education

11. 11 Labour market participation rates differ by age

12. 12 Comparing supply and demand - Labour supply based on fixed educational probabilities from MOSART compared to projected demand + fixed unemployment rates from the macroeconomic model MODAG

13. 13 Supply and demand for persons with other fields of science

14. 14 Supply and demand for persons with social science