Social status and networks in times of educational inflation : The returns of non-meritocratic labour market distributions

The educational system in Sweden is expanding and while some see higher education as a remedy for unemployment, others argue that credentialing of the society with diplomas will harm the competition on the labour market and the value of higher education. However, the effects of educational expansion are noticeable not only at the macro, but also at the micro level. Studies have shown that Sweden is internationally on the bottom of the list when it comes to gross returns of higher education. During the 1990s the educational expansion led to the impairment of university and college degrees to uplift individuals to high income positions. Studies have also shown that fluctuations in training premia are inconsistent with the supply of higher educated labour force. The focus of this quantitative dissertation is on the period between 2000 and 2010. By measuring the success on the labour market in terms of monthly salary the aim is to find out how the educational expansion affected Swedish labour market after the 1990s. By using SPSS, a multiple linear regression analysis is applied on data that is extracted from Levnadsnivåundersökningen (LNU) 2000 and 2010. The results suggest that even though the effects of higher education are not dramatically different between these years, it explained more of the total variance in monthly salary in 2000. Furthermore, social background and social networks had stronger effects on the success on the labour market in 2010. This implies that meritocratic principles were utilized more during the early twenty first century and that social status continues to determine salaries in a modern capitalist society.