Forecasting the Norwegian labour market for graduates holding higher degrees

Abstract

This article investigates the phenomenon of long‐term unemployed graduates of Norwegian higher education institutions over the period 1973–1999. The phenomenon was unexpected. One explanation for it is that the market for graduates was and remains in disequilibrium because wages are not sufficiently flexible downward. Thus unemployment would be involuntary. The other explanation is that unemployment is voluntary because the elasticity of the graduate labour supply is pushing wages down, and graduates are not accepting employment for which wages appear to be unacceptably low. They are waiting for better opportunities to appear. The author has undertaken a simulation by which he has proved, to his satisfaction, that the first explanation is the correct one and that only a slight improvement in the employment prospects of university graduates can be expected in the near future.