In post-socialist Europe, a generation did what it was asked to do: study longer, earn diplomas their parents never had, and found itself less mobile than those same parents. The fourth wave of the Life in Transition Survey (LiTS IV, 2022-23), published by the EBRD (European Bank for Reconstruction and Development) in collaboration with the World Bank, documents this reversal: cohorts born between 1940 and 1960 experienced upward mobility in a significant share of cases; those born between 1980 and 1990 display an inverted ratio. The diploma kept its promise of access to education. It did not keep its promise of access to a better life.
The Essentials
- In post-socialist Europe, cohorts born 1980-1990 are less socially mobile than those of 1940-1960, despite higher education levels, according to the CEPR Life in Transition Survey (4th wave).
- When the supply of diploma holders exceeds the labor market’s absorption capacity, the educational signal loses value without the demand structure evolving.
- Overqualification weighs on wages and skills valorization, according to research on vertical mismatch in Europe.
- The gap between access to education and valorization of education is both institutional and economic: labor markets have not evolved at the same pace as school systems.
- Institutional adjustments remain to be identified to reconnect diploma and mobility without reverting to selection by scarcity.
Cohorts 1940-1960 Had Fewer Diplomas and Greater Mobility
To understand this reversal, one must first understand why previous generations succeeded so well. In post-socialist economies, the decades 1950-1980 combined two favorable factors: rapid industrialization that massively created qualified positions, and a population with few diplomas where each additional level of education found immediate takers. Being the first in one’s family to earn a technical or university degree opened real doors, because those doors existed and few people were knocking on them.
The post-1989 transition added a second wave. Economic liberalization created new sectors—banking, finance, services, consulting—that demanded qualified profiles that universities struggled to produce quickly enough. For a decade, an educational advantage remained a decisive edge. Families that had invested in education saw their children rapidly climb professional ranks. The high upward mobility documented by LiTS reflects this window of structural opportunity: more demand than supply, in a rapidly changing economy.
This is an observation about labor market structure at a given moment. When demand for skills grows faster than supply, the diploma gains value. When the opposite occurs, this value diminishes.
The Supply of Diploma Holders Exceeds Demand for Skills
Cohorts born 1980-1990 grew up in educational systems that had massively expanded. Access to university became accessible throughout post-socialist Europe; governments invested in higher education as an automatic social elevator. The rate of higher education graduates advanced in nearly all these countries between 1995 and 2015. The reasoning seemed sound: more diplomas, more mobility.
The problem lies on the other side of the equation. The labor markets of these economies did not follow the same pace of transformation. High value-added sectors—technologies, advanced financial services, knowledge-intensive industries—did indeed progress, but not proportionally to the influx of diploma holders. The result is mechanical: when every employer can choose from among more diploma-holding candidates for the same position, the diploma ceases to be discriminating. It becomes a prerequisite, not an advantage.
This phenomenon of educational signal devaluation is documented in various contexts. Research on vertical skills mismatch, what economists call overeducation, documents the extent of the waste: workers trained for positions they don’t occupy, in economies that haven’t created enough positions commensurate with their training.
Post-socialist economies often cumulate this vertical mismatch with horizontal mismatch: the specialties chosen by students don’t correspond to expanding sectors. The historical appeal of law, humanities, and generalist fields has produced cohorts of graduates whose skills struggle to integrate into an economy demanding engineers, computer scientists, healthcare technicians. This gap between education and the labor market is found at the European scale, including for new fields linked to AI.
The Diploma as Safety Net, Not as Springboard
This reversal has a social consequence that mobility statistics capture only imperfectly: the transformation of the subjective role of the diploma. For cohorts 1940-1960, the diploma was a springboard. For a growing fraction of cohorts 1980-1990, it has become a safety net, a protection against downward mobility rather than a vector of ascension.
This nuance matters for understanding why the problem is difficult to diagnose from outside. Unemployment rates for diploma holders often remain lower than for non-diploma holders, which allows maintaining the discourse about the value of education. But unemployment is a binary measure. What it misses is the quality of employment occupied, the gap between acquired and mobilized skills, and above all the salary trajectory over ten years. A graduate in social sciences occupying a low-skilled administrative position is not unemployed.
His or her social mobility remains blocked.
The Life in Transition Survey, in its fourth wave, captures this aspect by comparing not only employment statuses but intergenerational trajectories over the entire life cycle. This is what makes its data particularly significant: they don’t photograph a moment but a movement. And the movement, for cohorts born 1980-1990, is going in the wrong direction.
A gendered dimension must be added to this picture. Women from these cohorts often progressed faster in access to higher education than men, a phenomenon documented throughout Europe, including in scientific fields, when institutions make the effort. But this educational progress collides even harder with market structures: highly qualified jobs in post-socialist economies remain concentrated in sectors with persistent horizontal segregation, and glass ceilings there absorb part of the educational gains.
What Distinguishes Labor Markets That Adapt from Those That Remain Rigid
The phenomenon documented by LiTS is not universal. Not all economies that increased their diploma rates have experienced this reversal. The difference lies in the speed with which labor markets created high value-added jobs, and in public policies that supported or hindered this transformation.
Nordic economies offer an instructive contrast. Denmark, Sweden, and Finland also massively increased their higher education graduate rates. But they simultaneously invested in transforming their productive base: support for innovation, reconversion of traditional industries, active labor market policies allowing workers to reposition themselves quickly. The result: vertical mismatch remains low there, and intergenerational mobility maintains high levels.
Post-socialist economies often missed this second investment. After the transition of the 1990s, the macroeconomic priority was stabilization. Educational expansion followed European standards. But the structural transformation of the labor market—diversification toward knowledge-intensive sectors, development of innovative SMEs, strengthening of continuing education institutions—progressed more slowly. Educational supply and economic demand became dissociated.
The UNESCO GEM Report 2026 focuses on access to education and equity (SDG 4) in different economies. Analyses of the European labor market identify this structural mismatch as a brake on productivity in Central and Eastern European economies. Potential gains from better skills allocation are substantial, but they assume profound institutional adjustments, not only educational policies.
Reconnecting Diploma and Mobility by 2035: Possible Paths
The question posed by LiTS data is not whether less training should be provided. Reducing access to higher education to restore the rarity of the diploma signal would be an anti-progressive and economically absurd response: economies that most need skills cannot afford to ration them artificially. The question is how to reconnect educational supply to a market structure that actually values these skills.
Several levers are currently being tested in Europe, with results that allow sketching trajectories toward the 2035-2040 horizon.
The first lever is specialization of educational supply. Several Central European countries—Poland, Czech Republic, Hungary—have undertaken reforms to direct part of student flows toward fields in tension, by creating financial incentives (differentiated scholarships, conditional loans) and developing bridges between higher education and vocational training. These reforms are recent and their effects on mobility will only be measurable at a decade’s horizon. But data on skills mismatches show that the signal is beginning to work in certain technical fields.
The second lever is demand-side industrial policy. Creating qualified jobs requires attracting or developing high value-added activities, which in turn requires investment, research, and attractiveness policies for technology companies. Poland has followed this path with relative success: its business services and information technology sector created several hundred thousand qualified jobs in fifteen years, absorbing part of the surplus of diploma holders. The trajectory is not generalizable identically, but it illustrates that demand for skills can be constructed, not merely expected.
The third lever is continuing education and reconversion. Autonomy in work arrangements is a dimension of job quality that matters for skills retention in organizations. But at the macro level, reconversion of overqualified workers from their current positions to functions better adapted to their training requires robust continuing education systems and companies prepared to invest in skills development rather than managing mismatch through wage suppression. This is precisely what post-socialist economies have developed the least.
The digital divide adds another layer of complexity. The Life in Transition Survey, in its same survey wave, documents that access to digital skills is strongly correlated with mobility in emerging economies. Cohorts born 1980-1990 that could develop advanced digital skills, independent of their initial diploma, have significantly better trajectories than those confined to traditional skills of their training. This result suggests that digital reconversion, provided it is accessible and of high quality, could partially compensate for initial structural mismatch.
The least favorable trajectory, toward 2035-2040, would be adjustment downward: economies that stabilize their mismatch by reducing educational aspirations, maintaining sluggish labor markets, and exporting their diploma holders to better-organized economies. This brain drain scenario is already visible in certain countries—Romania, Bulgaria—where emigration of diploma holders to Western Europe is massive. The irony is complete: these countries have invested in skills that benefit other economies.
The most favorable trajectory would assume convergence between educational supply reform, active industrial policy, and investment in continuing education—three pillars that each require institutional capacities these economies are still building. The 2035-2040 horizon is reasonable for adjustments of this nature, provided political signals go in the right direction starting today.
Data Compels a Rethinking of Assumptions
The reversal documented by LiTS challenges a simple idea that long guided educational policies: the idea that massification of higher education is, in itself, a driver of mobility. It is, under certain conditions. When demand for skills grows at the same pace as supply, and when labor market institutions allow qualified workers to reach positions commensurate with their training.
When these conditions are not met, educational expansion creates a new inequality: that between diploma holders who find outlets corresponding to their training and those who, despite years of studies, end up in jobs that demanded far less. This inequality is all the more frustrating as it strikes people who played by the rules they were given.
The solution passes through economies’ capacity to construct demand for skills at the level of their educational supply. This is a matter of economic policy and industrial policy. LiTS’s diagnosis places the challenge at the level of investment choices, regulation, and industrial policy allowing an economy to create jobs corresponding to the qualification level of its graduates.
Sources
- CEPR / Life in Transition Survey, 4th wave, Social mobility and digital divides in emerging economies: https://cepr.org/voxeu/columns/social-mobility-and-digital-divides-emerging-economies-evidence-4th-wave-life
- Eurofound Skills Matching Index, data on overeducation and vertical skills mismatch in Europe (Eurofound, Dublin)
- UNESCO Global Education Monitoring Report 2026 (UNESCO, Paris)
- McKinsey Global Institute, analysis of the European labor market and skills mismatches, 2025 (McKinsey & Company)
