Employability of graduates and development of competencies: mind the gap and mind the step! Empirical evidence for Italy

European policy makers are focusing on the gap between the competencies required of graduates by the modern production context and the knowledge that university systems traditionally transfer to students. Their objective is to significantly transform the higher education system so that it adheres more closely to the new needs generated by the vigorous technological and organizational innovations in production and work. For the time being, the so-called Bologna Process and the Dublin Descriptors are an attempt to change the university's mission and unit of measure, seeking to move from the transfer of knowledge from the teacher to that of learning by the student, and from disciplinary knowledge to competencies. At the same time, the European project “Tuning Educational Structures in Europe” indicates the opportunity to operationalize a distinction between generic (or transversal) competencies and specific competencies (in the personal area of discipline), also suggesting methodological indications to design degree courses and to adopt a 'constructivist' pedagogy. Economic analysis has long shown that the considerable gaps between competencies required and those held on entering the labour market have costly consequences both in the short and long term. In this paper, it is argued that these gaps are not only responsible for the medium-low positioning of the competency profile that develops during working life with respect to a counterfactual constituted by a graduate with a good match between the competencies required and those held. They also tend to affect the growth path of the competencies themselves: the bigger the gap, the smaller the steps in competency growth. Through an econometric analysis controlling for a number of factors, the paper also documents that the level of „expressed‟ competencies significantly influences graduate remuneration whereas the cultural background of the family of origin tends to assume greater importance than the formal educational level acquired, suggesting that, thus far, this is mainly responsible for the formation of the transversal component of competencies. The results are confirmed by controlling for endogeneity of schooling as well as of competencies, indicating that degrees per se are an increasingly weak signal for recruiters and the competencies they are looking for. The Bologna Process could overturn the situation, provided it is integrated with a constructivist pedagogical approach, a tool that is lacking today but is vital in providing education processes with the key role of competency formation. The paper concludes with a series of policy indications.