We investigate to what extent differences in educational mismatches across countries and fields of study are explained by differences in labour institutions, educational institutions, and labour market imbalances. We rely on early career data for graduates in Europe and Japan and distinguish between full mismatch (FMM: field-ofstudy mismatch and overeducation combined), mere horizontal mismatch (HMM) and mere vertical mismatch (VMM). Mere HMM is found to be lower in countries with higher employment protection, higher unemployment benefits and more selective educational programs. For mere VMM, particularly differences in imbalances explain cross-country differences. Most country-level variables affecting mere HMM or VMM also affect FMM. In addition, FMM is positively related to collective bargaining coverage. Conclusions regarding field-of-study differences in mismatches are analogous, with both educational program characteristics and imbalances being explanatory factors.

We investigate the differential impact of alternative combinations of horizontal and vertical educational mismatches on wages. By using panel data for Belgian graduates, we consider the role of unobserved worker heterogeneity. Random measurement error in both types of mismatches is accounted for by adopting instrumental variable techniques. We consistently find that overeducated individuals without field of study mismatch earn less than adequately educated workers with a similar educational background. However, for individuals who are working outside their field of study, such a wage penalty is not always observed once accounting for unobserved heterogeneity and random measurement error. In some cases, field of study mismatch even seems to be financially beneficial to the worker. These findings contribute to our understanding regarding the extent to which educational mismatches are truly problematic. The results call for policies that focus primarily on combatting vertical mismatches.

Relying on data for Belgian graduates, we investigate the relationship between motives to participate in higher education (investment, educational consumption, student life consumption and social norms) and overeducation after graduation. We also examine whether these motives affect the relationship between overeducation and other outcomes like wages and job satisfaction. Key findings are that individuals motivated by educational consumption are less likely to be overeducated but face a stronger job satisfaction penalty to overeducation. Moreover, those motivated by student life consumption have a higher likelihood of overeducation.

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