Younger New Zealanders are, broadly speaking, more highly qualified than those in older age groups. Why is this, and does it matter?

Younger people are more likely than older people to be degree qualified and are less likely to have no qualification. In 2021, 40% of 25–34-year-olds had a Bachelor’s Degree or higher compared with 17% of people aged 65 or older (see Chart 1).

Chart 1 also shows that over half of 15-24-year-olds have only a school qualification. This is seemingly at odds with the conclusion that younger people have higher qualifications. However, many of these 15-24-year-olds are in the process of attaining a tertiary qualification. Comparing 15-24-year-olds with 25-34-year-olds, the proportion with only a school qualification falls from 52% to 22% and the proportion with a tertiary education certificate, diploma, Bachelor degree or higher rises from 25% to 67%.

Higher educational attainment is associated with higher rates of employment and higher earnings as well as better wellbeing outcomes such as better health, social connections and civic engagement. It’s arguably easier to draw these kinds of conclusions about people in similar age cohorts. Comparing younger and older age cohorts is more complex because there are other factors at play.

For instance, older people usually have many years of work experience they can point to, to demonstrate their capabilities to employers, whereas younger people rely more on their qualifications to signal their capabilities in the labour market. So, for younger people there is probably a stronger relationship between qualifications and labour market outcomes. On the other hand, health outcomes can be influenced by the nature of people’s participation in the workforce. For example, older people who have worked in manual jobs for many years may suffer from related health issues.

The qualification levels of the whole population are changing all the time. We need to be cautious comparing qualification data over multiple decades because the surveys used to collect this data have changed and the education system has changed. Bearing these issues in mind, over the past 30 years, among people aged 25 years or older, the proportion with a Bachelor’s Degree or higher has been increasing.

This increase in Degree-qualified people has coincided with a decrease in the proportion of people with a tertiary Certificate or Diploma, which has been attributed to lower numbers of people gaining trades qualifications (mostly certificates at level 4) after the Global Financial Crisis (GFC).

Qualification levels have been increasing across all age groups, partly as younger, better-qualified people age, but also because people across all age groups have been completing qualifications.

Chart 2 shows that, in 2021, 59% of people completing a tertiary qualification were aged 25 years or older, 26% were aged 40 years or older. This age profile has been consistent over the 10 years that this dataset extends back to.

A key difference between the age groups is that younger people are gaining higher qualifications than older people. As chart 3 shows, in 2021, 48% of tertiary qualifications gained by people under the age of 25 were Bachelor’s Degrees or higher compared with 37% of people aged 25 to 39 years and 21% of people aged 40 years or over. People aged 40 years or over are much more likely to gain a Certificate level 1 to 3.

Younger people completing higher qualifications than older people contributes to younger people tending to having higher qualifications than older people. But the educational attainment of successive age cohorts over several decades is probably related to more fundamental changes in the cost, quality, and breadth of education opportunities on offer, as well as the level of knowledge and skills required in the workforce. Another reason why younger people tend to have higher qualifications than older people is that migrants from overseas tend to be younger than the population as a whole and tend to be well qualified because their visas require them to be.

In this article we focus on the population’s highest educational attainment, but the cost, quality and breadth of education opportunities relates to the whole education system from early childhood education (ECE) through to tertiary education. For example, increasing participation in ECE and better quality ECE generally results in higher educational attainment at school and tertiary education.

There is very little information about how the cost, quality, and breadth of education opportunities in New Zealand have changed over time. To understand why the educational attainment of people aged 65 years and older differs to 25-34-year-olds, we would ideally need data extending back to the 1950’s.

Data on tertiary education participation rates from 2003 show that participation has either fallen or remained stagnant across all qualification levels, and across people aged 25 years or older. However, it is probably fair to say that if we could look all the way back to the 1950’s we would see a trend of increasing participation in early childhood education, higher attainment at school, students staying in school longer, and rising participation in tertiary education, even if some of those trends have stagnated or reversed somewhat in recent times.

It's also generally accepted that the skills needed in the workplace are rising over time, thereby requiring workers, especially younger workers, to increase their qualification levels. Rising skill needs are generally attributed to technology increasingly carrying out routine tasks, requiring workers to have the skills to interact with the technology and carry out the more highly skilled tasks that technology is unable to do.

Credential inflation is also a widely observed trend in the labour market whereby the education credentials of jobs increase over time. The drivers of credential inflation are attributed to both a genuine increase in the skill needs of jobs and employers’ tendency to require ever-increasing, often unnecessary, levels of education or qualifications for jobs. Unnecessary credential inflation is enabled by there being a surplus of tertiary education graduates in the job market, which gives employers the opportunity to use high qualifications as a screening device even when the job doesn’t require them.

The matching of employer skill needs to the skills that workers have is a challenging issue, but one that is recognised as crucial to a country’s economic development, living standard and wellbeing. Adding qualifications into the discussion is a necessary complication because it opens up issues of whether the education system is producing enough people with the right level of qualifications needed in the workforce, whether the qualifications being delivered are teaching students the skills and knowledge they need in the workplace, and whether the education system should be prioritising the needs of employers over the interests and aspirations of its students. All thorny issues to which there are no easy answers.

And for those of us interested in understanding the role that qualifications play in the labour market, things are only going to become more complex as, in some sectors, traditional qualifications seem to be losing ground to more flexible learning options such as micro-credentials and online learning platforms that enable learners to upskill at their own pace without necessarily getting a recognised qualification at the end of the process.