MPP612 Research Proposal Final Draft

Botayev, Nurum
Rakat, Olzhas
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Underemployment (over-qualification) in Kazakhstan:

consequences on the economy and solutions to prevent it

by Botayev Nurum, Olzhas Rakat

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ABSTRACT

Underemployment in Kazakhstan has been proposed as a way of addressing high

numbers of youth unemployment and not full potential labor force use. In this paper,
we investigate the possible effects of different factors - Job Opportunity, Language
Barrier, Lack of skills, Job Market Competitiveness. Empirical simulations,
based on data collected from surveys taken by individuals who have work experience,
are used to calculate the potential effects of the different factors mentioned above on
the rate of underemployment. The paper is intended to stimulate employment and
decrease estimated high rate of underemployment among the youth. Such estimates
have not been researched in Kazakhstan previously and could have a significant
positive effect on existing government programs oriented on higher education, labor
protection and stimulation of the job market.

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Rakat, Olzhas
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INTRODUCTION

Problem Statement
After completing small interviews among group mates and acquaintances that
have graduated from higher education institutions in Kazakhstan we identified a
trend that a significant amount of people are/were occupied in areas different from
their fields of study. We believe this is mostly caused by the lack of professional
orientation in high schools and higher education institutes. Our area of interest is
focused on the educational programs and guidance provided for graduates in high
schools and universities.

Purpose of the Study

We suppose that due to lack of preparation for future careers and guidance for
high school and university graduates creates underemployment in the general labor
force. If our assumptions are true - a great amount of professionals engaged in
different fields are not equipped with the basic knowledge of their area of occupation.
We believe that underemployment caused by unguided high school and university
graduates could have severe consequences on the economy. If more new graduates
occupy fields different from their areas of study they will not be performing at full
potential and in result so might the economy. Given that underemployment is a
common trend among different countries we are interested in looking at previous
similar researches for different alternatives oriented on school and university
graduates to prevent underemployment.

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Rakat, Olzhas
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Research Questions
Underemployment - caused by unguided/unprepared for career endeavors
university graduates; consequences on the economy and solutions to prevent it.

Why do high education graduates in Kazakhstan choose not to work at their

fields of study?
Can matching skills with corresponding jobs and employment exchange
programs

in

Kazakhstan

improve/prevent

the

situation

with

underemployment?
Inspect implemented job orientation projects in other countries and evaluate
their potential effectiveness in Kazakhstan.

Definition of Terms

Underemployment - employed who work at jobs in which their skills

are underutilized are not officially counted among the unemployed,
though in a sense they are.

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Rakat, Olzhas
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LITERATURE REVIEW
The sustainable development of contemporary Kazakhstans society is contradictory,
unstable and uneven. Despite the relatively high rates of economic growth since the
beginning of the 21st century the socio-economic situation is characterized by
unfavorable trends: increasing income differentiation, increasing social tensions,
rising unemployment, including the theme of our research underemployment of new
graduates. While there are four most common types of underemployment, our
research refers to skills-related underemployment, which are employed people who
work at jobs in which their education, experience and/or skills are beyond of job
requirements (Maynard, Douglas C. and Daniel C. Feldman, 2011).
While the rate of unemployment and other such statistics show labor-market
mistakes by giving the total number of unemployed, these data do not unclose the
number of workforce which are employed in economically inadequate jobs (Prause,
2011). Because of main attitude of scientists was directed to unemployment and
inflation issues the problem of underemployment has enjoyed little attention before.
However few decades from now underemployment started to gain much more public
consideration, so there are a lot of studies which give quite a good view of this
situation consideration, so there are a lot of studies which give quite a good view of
this

situation

from

different

angles

of

research

consisting

of

economics, management, psychology, sociology, age, gender and race

The approach developed in this literature review is based on four related concepts:
economic and management;
psychological;
sociological;
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Rakat, Olzhas
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age, gender and race.

We present them in four distinct paragraphs.

Economic and management concept

Underemployment has various factors on different aspects of life one of greatest is the
economic and management concept that is looked and discussed by many researchers.
In Maynard and Feldmans combined work of Underemployment. Psychological,
Economic, and Social Challenges discuss the general term of underemployment
using it to identify the situation when people who are employed are not fully efficient.
One of the causes of such inefficiency is said to be over-education; Oliveira, Santos,
& Kiker in their work of The role of human capital and technological change in overeducation discuss over-education as being a result of excess schooling but short
tenure and job experience. Maynard and Feldman identify one of the most recent
causes of over-education and short job experience is the lack of job opportunities
caused by economic conditions; which forced educated young people to work at parttime positions. Maynard and Feldman work is thought to be theoretical with
arguments and observation from previous work; the goal of their work is to identify
the consequences and challenges caused by underemployment in order for future
research to have a fundamental knowledge of the concept. Oliveira, Santos, & Kiker
work is seen to be a theoretical paper based on research and analyzed data found in
Portugal. Their research is aimed to portray the value of human capital in the
government effort to promote economic growth in Portugal.
Oliveira, Santos, & Kiker look into the Porutgese data collected in the late 20th
century and try to identify the cause of misplacement of the work force in different
sectors of the economy. The researchers initiate two hypothesis that would is looked

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Rakat, Olzhas
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into in order to find research results. The first hypothesis is set to be the result of the
education system as the main source of underemployment; where some educational
facilities lack in required school qualifications and others have greater amount of
credentials that is necessary. The second hypothesis addresses the need for
technological and managerial market advancement in order to classify skilled and
unskilled labor; due to the lack of innovation many educated workers are placed in
positions that uneducated/less educated employees can manage to perform. The
results from this research conclude that technological innovation is favored by the
government in order to promote economic growth and simultaneously identify its
skilled/unskilled labor.
Maynard and Feldman describe the detailed theoretical approach of studying
underemployment and classify the different form of creation of underemployment in
labor force populations. Due to the post financial crisis effect on the world economy
underemployment is a new evolving topic that is discussed by scholars of different
backgrounds of research. Maynard and Feldman look into previous scholarly research
of underemployment from the economic, social and psychological aspect in effort to
find the effects and possible solutions of underemployment. Maynard and Feldman
conclude in their research that due to the economic and social ties of the modern
society underemployment touches every aspect mentioned above and the effects are
more than significant.
The principal findings of Maynard and Feldman state a valuable source of knowledge
of underemployment needed to explain the effects and solutions of the concept. Due
to the high value of underemployment observed in developing countries such findings
are critically important in guiding the labor force to efficiency. Oliveira, Santos, &
Kiker recognize the need for the labor force to be efficient by involving technological

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innovation to identify skilled from unskilled labor. Both research papers agree that the
current underemployment that is being observed is caused by over-education of future
employees who are only offered part-time/less skilled positions. The findings of
Oliveira, Santos, & Kiker are significant in sense that it portrays the importance of the
efficiency of human capital in government stimulated economic growth.
Taken together, these findings suggest that, in times of recession, youth just entering
the labor market are likely to experience more unemployment and to find less
opportunity for employment in desirable jobs than youth entering the labor market
under better economic circumstances (Prause, 2011).

Psychological concept.
The psychological effect of underemployment and its consequences on the work force
performance is broadly discussed by numerous researchers. Mostly defined as an
economic event caused because of over-qualification and underutilization of the
common employee, underemployment has a psychological effect on every worker
who is subjected to it. In Luksyte and Spitzmueller Behavioral science approaches to
studying underemployment. In Underemployment different measurements of
underemployment including psychological effects are looked into. Underemployment
is thought to often lead to significantly lower self-esteem as well as increases in
psychological distress (Prause, 2011). The ability to measure that effect with
behavioral science is critical in resolving the negative consequences of
underemployment. Anderson and Winefield in their The impact of underemployment
on psychological health, physical health, and work attitudes research identify the
outcomes of underemployment on employee personal wellbeing. The inefficiency
caused by underemployment is not only caused by over-education and under-

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Rakat, Olzhas
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qualification but may also be the result of psychological worries attained while
occupying unsatisfying job position. Both research papers use a theoretical approach
of identifying psychological effects on employees by underemployment.
Luksyte and Spitzmuellers construct a theoretical paper dividing it into two parts
where first, the need for a detailed definition and agreement of what
underemployment specifies is looked for. Luksyte and Spitzmuellers agree that in
order to research the measurements of underemployment psychological effects there
is a need to name what they refer to when the term underemployment is used. Second,
Luksyte and Spitzmuellers seek to categorize underemployment as uni-dimensional or
multidimensional; where different observation were look to find what better represent
underemployment underutilization or lack of professionalism.
Anderson and Winefield review previous research on the psychological and wellbeing
effects of underemployment; due to underemployment being relatively new economic
concept previous research focused only on the unemployed and fully employed.
Anderson and Winefield hypothesize that due to the increasing number of female and
elderly employees firms and businesses are creating non-standard employment
arrangements. They believe that these non-standard employment arrangements that
are the root cause of underemployment; hence the psychological distress of the
modern employee. Anderson and Winefield address existence of direct link between
physical health and psychological health and how they are both impacted by the
career attitude and commitment that is earned during a period of underemployment.
The principal findings of Luksyte and Spitzmuellers states that underemployment can
be uni-dimensional and multidimensional with various factors that affect the
employee. Newly defined measurements of the psychological effect in their research
allow future researchers to categorize the level of underemployment and its

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Rakat, Olzhas
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significance. Anderson and Winefields principal findings conclude that psychological

effect from underemployment caused by nonstandard employment arrangements has a
direct impact on the physical wellbeing of the employee; hence on his/her
performance.

These

findings

are

significantly

important

in

identifying

underemployment in different work conditions and measuring their severity. Most

importantly both research papers conclude that more research on this topic is needed
and the researchers agree that their paper can be used a fundamental view in future
research.

Sociological concept.
In this paragraph we want to give some analysis to empirical literature that refers to
sociological impact of underemployment. First of all we want to start with Newman
and Zvonkovic, Guss, & Ladd studies which noticed that underemployment can
produce a negative influence on interpersonal relations due to lack of funding for
leisure activities and an avoidance of social outings. Another issue is the claim that
underemployed persons will produce less output. The reason for that assumption is
that underemployed will not work hard because they find their jobs pointless and
demotivating (Borgen, Amundson, & Harder) and consequently, their performance
will lower. Bolino and Feldman also agreed with such assumption empirically
demonstrating a negative relationship between overqualification and performance.
However there are other studies that have obtained opposite results, reporting
positive relationships between overqualification and performance (Fine & Nevo,
2008; Erdogan & Bauer). Which of assumptions are really related to our state is one
of our task to show in our research. Also there is a gap in sociological concept of such

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Rakat, Olzhas
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literature which is clearing the measure of underemployment, how to clarify

sociological impact of underemployment.

Age, gender and race concept.

At this part we review and analyze sources how age, gender and race affect the
underemployment. Many well-known scientists researched the dependence between
these categories and the problem of underemployment. We know that the less
possibility for a person to find workplace which gives satisfactory salary and adequate
working hours the more human capital is discouraged and such situation causes a
great damage to states economy and society. There are some study which note that
the effects of youth underemployment (young workers are workers in the age range
of 1624) on a variety of outcomes including psychological health, alcohol abuse and
criminal behavior (Martin, Mosisa & Hipple, Prause & Dooley). At his research
Martin supposed that younger people experience higher unemployment and
underemployment than adults because of little experience and lack of motivation, and
they at higher risk of underemployment. Cawthorne, Kim, discussed that female
experience more underemployment cases than male, due to lower levels of
education, a concentration of female workers in low-paying works and pregnancy.
Social scientists as Slack, T., & Jensen, L, De Jong, G. F., & Madamba, A. B. have
great concern on racial and ethnic inequality in employment and their
underemployment problem. They noticed that Blacks, Hispanics, and non-citizens all
face higher underemployment than do workers who hail from other groups (Slack,
2011). At our research given in these articles information could be valuable because
Kazakhstan also has similar problem with non-Kazakh minority and immigrants.

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Rakat, Olzhas
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Even though there is quite a wide literature relating to the impact of

underemployment on youth, research examining overeducation matter in youth
samples is not so many. There is a lack of literature which study possible government
measures for decreasing underemployment as well as its socio-economic costs in
country, society and youth themselves, especially in developing countries. While our
research is more concerned about youth underemployment, but it must be noted that
underemployment among older ages has studied a little despite fact that older people
create most of labor force in developed state economy. So our research will try to
investigate relations between age of employees in terms of underemployment.
Based on the review of the research we can conclude that there is no significant gap of
information on underemployment and its effects on the economy. The general
findings of this review identified the broad impact of underemployment on different
factors of the economy managerial, psychological and social effect. Almost every
scholarly work that was reviewed agreed upon the need of additional research of
underemployment and its causes. Based on the information and fundamental
knowledge of underemployment gained a new research related to the topics and
concepts mentioned in previous researches will be looked in the case of Kazakhstan.
The research will take in consideration the different concepts that were reviewed and
identify the psychological, social and managerial effect on the human capital in the
economic growth of Kazakhstan.

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Rakat, Olzhas
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CONCEPTUAL MODEL
This paper is motivated by recent numerous research on underemployment that have
shown it to be a work force situation trend witnessed in all economies world-wide.
This has triggered the question what is the main cause of this trend and what
relationships between different labor force factors can explain underemployment. This
research argues that of the apparent reason of underemployment is formal over
practical education system, language barrier Russian/Kazakh/English, lack of job
opportunity and high competitiveness on the job market. With the help of empirical
analysis and cross-section comparison of countries that also experience high levels of
underemployment we support the argument that the relationship of underemployment
and its apparent reasons (mentioned above) is significant.
In theory the occurrence of underemployment can be explained by several types of
occurrence based on various research backgrounds of authors of the literature used.
Several research agree in the argument that underemployment is a result of excess
schooling but short tenure and job experience (Oliveira, Santos, & Kiker). Others
argue that short job experience is the outcome of the lack of job opportunities caused
by current economic conditions which forces educated young people to work at parttime positions (Maynard and Feldman). However, some researchers argue that oldfashioned managerial market approach lacks the ability to classify skilled and not
skilled labor, misplacement of the labor force is the main cause of underemployment.
Given diverse views on the causes on underemployment this research focuses on job
opportunity, language barrier, formal education over practical and competitiveness in
the job market as the control factors of underemployment.

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Definition of Concepts

Underemployment an employment situation where employed who work at jobs in

which their skills are underutilized are not officially counted among the unemployed,
though in a sense they are. (Maynard and Feldman)
Economic Recession a general slowdown of economic activity caused by a financial
crisis where household income, business profits decrease while bankruptcy and
unemployment increase.
Job opportunity an availability of occupation balanced throughout the economy;
where the prospect of employment in different segments of the economy is high.
Formal Education system of schooling, based on prescribed educational standards
and a specified curriculum, which relates to giving students more theoretical material
rather than practical.
Language Barrier difficulties in communication resulting from speaking different
languages.
Lack of skills the employment situation when school graduates are not able to
perform professionally at necessary level due to shortage/absence of practice or basic
knowledge
High University Acceptance rate rate which describes the situation when university
accepted more candidates by lowering qualitative and quantitative admission
requirements which give candidates more opportunity to gain university degrees (BS,
BA, MS, MA).
High Number of University graduates excess of the quantity of graduates holding
university degrees, causing toughening of competitive job market, which forces
employers to come up with new hiring requirements.

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Rakat, Olzhas
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Concept Model and Relationships

Economic
Recession

Job
Opportunity

Formal Education

Language
Barrier

High University
Acceptance rate

Lack of skills

Number of University graduates

(Job Market Competitiveness)

Underemployment

Economic Recession

Job Opportunity

Underemployment

Decreasing the aftermath and overturning the negative consequences of an

economic recession may generate more job opportunities which can substantially
reduce underemployment. A university graduate will more likely pursue his goal to be
occupied in the field he had studied if the opportunity of employment in that field is
high. In particular the chances of a university graduate to be occupied in a position he
is over-qualified increasingly decrease if that graduates is given the ability to apply
for a position of his qualification. The expansion of the economy should result in
greater job openings and reduction of underemployment. Therefore, it is highly
critical for government policy makers to recognize better job opportunities as
reinforcement in decreasing underemployment; which will result in a more effective
labor force.

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Lack of skills
Formal Education

Language Barrier

Underemployment

Formal education systems that focus on theory and lecture based teachings
lack in preparing new university graduates to different scenarios and obstacles that
employees face during employment. In contrary, the formal education system prepares
a future labour force that is highly educated that are over-qualified for the job position
they are to occupy. Due to outdated knowledge, moreover without proper practical
training and lack of necessary skills, which is required by employers, university
graduates struggle finding starting positions; where low wages are compensated by
the ability to develop own skills in their specialization field. In result, university
graduates accept job positions where their gained knowledge is not required. In
addition, the formal education system does not prepare university graduates to
overcome language barriers, such as documentations and communication on the
different languages used in the job market. University graduates who lack language
skills in Russian, Kazakh or English may not be granted a job position associated with
their field of study. In result, university graduates will again accept job positions
where their gained knowledge is not required. By restructuring the education system
and emphasizing on practical education through trainings and internships university
graduates would become less over-qualified and underemployed; their knowledge and
skills would be at the level required to perform effectively. Decreasing formal
education and increasing practical education the level of underemployment is set to
decrease.

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Rakat, Olzhas
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High University Acceptance rate

Number of University graduates

(Job Market Competitiveness)

Underemployment

Increased competition is seen as a good factor that filters the best out of the
population. However, highly competitive job markets can be seen as a cause for
increased underemployment. In addition to the low job opportunity situation the
university graduate has to compete for the available job position that is associated
with his field of study. Hence, not all graduates are going to be granted jobs they had
studied for but most likely will accept jobs they can cope with causing
underemployment. The root of this problem lies in the high acceptance rate of
universities where education is seen as a simple good which is sold by educational
institutions and bought by the population. Having known about the demand side
universities try to sell education at any price and conditions by decreasing own
admission requirements; making it easier to achieve the goal of getting a higher
education degree. In result, increased number of university graduates create
competition for the limited amount of job positions that require specific education.
Decreasing the job market competitiveness by decreasing the number of university
graduates will decrease the level of underemployment.

Hypothesis:

Increasing job opportunity, decreasing language barriers,

formal education and competitiveness in the job market should,
ceteris paribus, lead underemployment to decrease.

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Rakat, Olzhas
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Operationalization:

In order to evaluate the severity of the independent variables on underemployment

we use a survey based approach in gaining necessary data. In all four categories job
opportunity, language barrier, formal education over practical, competitiveness in the
job market the survey takers are asked to rate the severity of their experience when
applying to a job from a scale of 0 to 10 (0 meaning did not experience at all and 10
meaning significantly experienced). For example, the survey taker will be asked to
evaluate the level of job opportunity, language barrier and competitiveness in the
market that they personally experienced when applying for a job. The survey taker
will additionally be asked to evaluate the harshness of his/her experience of formal
education over practical experience received prior applying for his/her first job
position.
There are no universal measurements or data that reflects the severity of
underemployment. Instead the rate of unemployment and other such statistics show
labor-market mistakes by giving the total number of unemployed, these data do not
unclose the number of workforce which are employed in economically inadequate
jobs. In order to measure and gain data on underemployment the survey taker will be
asked to give a level on how close he/she is employed in the field they have studied in
university on a scale from 0 to 5 (0 meaning not at all close, 5 exactly the same
field).

Consideration of errors
A potential criticism is that number of university graduates may be endogenous since
such number may be affected by increased birth rate or migration, or unpopularity of

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secondary education. Also lack of skills and language barrier existence could be
caused by simple ignorance of students and population. On the empirical level we will
address this common errors possibility in several ways. First we will include in the
survey list questions about received secondary education. Second we will ask how
much time student spends on language studying and practicing. It should be said from
the beginning that it is quite impossible to resolve the issue of causality; however we
will try lowering the consequences of such errors.

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CONCLUSION
Prior to this research the concept of underemployment was found to be not addressed
in Kazakhstan. However, based on personal and shared experience of others the
features of underemployment is present in the current Kazakhstan job market. In order
to start the research assumptions were made that underemployment in Kazakhstan is
caused by the educational system that does not prepare school/university graduates
with proper skills to be occupied in their fields of study. However, in order to pursue
the legitimacy of this assumption previous scholarly research on underemployment
was analyzed. Fortunately, in the past decade the interest to underemployment within
scholars has gradually increased; there was not shortage in the literature for the
research review. In the analysis of the literature it was concluded that
underemployment is present in many developing and developed countries; where in
each case different policies were used. Most scholars agree that the main cause of
underemployment is unstable economic conditions and low practical preparation in
educational institutions. In result, four potential factors of underemployment in our
conceptual model are identified lack of skills, language barrier, lack of job
opportunity and over-competitive job market. Due to underemployment not being
previously studied in Kazakhstan, there is a need to collect data based on well
constructed survey, taken by a sample of individuals who have job experience. Based
on this data we will conclude what factor has the most significant effect on the rate of
underemployment in Kazakhstan. By identifying the most significant factor(s) we
plan to perform a cross-sectional analysis of policies used in other countries to
address similar factor(s). Most suited policy alternatives used in foreign countries to
address underemployment will be accompanied by newly created alternatives based
on the local specification of Kazakhstans educational system and job market.

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REFERENCES
Bolino, M. C., & Feldman, D. C. (2000). The antecedents and consequences of
underemployment among expatriates. Journal of Organizational Behavior, 21(8),
889-911.
Borgen, W. A., Amundson, N. E., & Harder, H. G. (1988). The experience of
underemployment. Journal of Employment Counseling, 25(4), 149-159.
Cawthorne, A. (2008). The straight facts on women in poverty. Center for American
Progress.Retrieved from Http://www.Americanprogress.Org, (2008/10)
De Jong, G. F., & Madamba, A. B. (2001). A double disadvantage? minority group,
immigrant status, and underemployment in the united states. Social Science
Quarterly, 82(1), 117-130.
Dooley, D., & Prause, J. (2004). The social costs of underemployment: Inadequate
employment as disguised unemployment Cambridge University Press.
Dooley, D., Prause, J., & Ham-Rowbottom, K. A. (2000). Underemployment and
depression: Longitudinal relationships. Journal of Health and Social Behavior, ,
421-436.
Erdogan, B., & Bauer, T. N. (2009). Perceived overqualification and its outcomes:
The moderating role of empowerment. Journal of Applied Psychology, 94(2),
557.

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Fine, S., & Nevo, B. (2008). Too smart for their own good? A study of perceived
cognitive overqualification in the workforce. The International Journal of
Human Resource Management, 19(2), 346-355.
Kim, M. (2000). Women paid low wages: Who they are and where they work.
Monthly Lab.Rev., 123, 26.
Luksyte, A., & Spitzmueller, C. (2011). Behavioral science approaches to studying
underemployment. Underemployment (pp. 35-56) Springer.
Martin, G. (2009). Portrait of the youth labor market in 13 countries, 1980-2007, A.
Monthly Lab.Rev., 132, 3.
Maynard, D. C., & Feldman, D. C. (2011). Underemployment Springer.
McGuinness, S. (2006). Overeducation in the labour market. Journal of Economic
Surveys, 20(3), 387-418.
Mendes de Oliveira, M., Santos, M. C., & Kiker, B. (2000). The role of human capital
and technological change in overeducation. Economics of Education Review,
19(2), 199-206.
Mosisa, A., & Hipple, S. (2006). Trends in labor force participation in the united
states. Monthly Lab.Rev., 129, 35.
Newman, K. S. (2009). No shame in my game: The working poor in the inner city
Random House Digital, Inc.

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Slack, T., & Jensen, L. (2007). Underemployment across immigrant generations.

Social Science Research, 36(4), 1415-1430.
Zvonkovic, A. M., Guss, T., & Ladd, L. (1988). Making the most of job loss:
Individual and marital features of underemployment. Family Relations, , 56-61.

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