Cross-country Differences in Graduate Overeducation

Abstract

Cross-country differences in graduate overeducation and its persistence **We investigate the factors that contribute to the cross-country variation in graduate overeducation and its persistence by means of multi-level analysis. Our analysis is based on data from representative surveys among graduates in thirteen European countries and Japan and focuses on the jobs six months and five years after graduation. Major factors to explain the cross-country variation in overeducation and its persistence are found to be differences in the structural imbalance between the overall demand and supply of skilled workers, differences in the imbalance between the demanded and supplied fields of study and differences in the business cycle at the time of graduation. Also the quality and orientation (general versus vocational) of the educational program are important, but particularly to explain within-country differences. Finally, labour market institutions such as the strictness of the employment protection legislation are found to be less important.

Determinants of regional differences in rates of overeducation in Europe

“…The results very clearly support the view that overeducation is predominantly driven by an excess in the supply of educated labour with the ratio between the number of graduates in employment and the share of workers in professional occupations highly significant in both equations. This is consistent with job competition and assignment approaches and with previous empirical findings (Verhaest and van der Velden, 2013;Ghignoni et al, 2014). However, the marginal effects are small with the models suggesting that a 10 % increase in this ratio will drive male and female overeducation rates up by 0.5 and 0.7 parentage points respectively.…”

“…Our approach is slightly different as we explicitly focus on factors that directly address supply and demand imbalances or mismatches, whereas, with the exception of the youth unemployment rates at NUTS 2 level, Ghignoni et al (2014) analyse demand and supply factors separately. Croce et al (2012) and Verhaest et al (2013) also found that measures related to excess supply of skilled labour were related to the incidence of overeducation.…”

“…Strong EPL may also limit the extent to which females are forced to occupationally downgrade in the presence of children, although Verhaest and Van der Velden, (2013) report that EPL impacts were unimportant in explaining inter-country variations in overeducation among a graduate cohort. Adalet McGowan and Andrews (2015), in their analysis of the related concept of skill mismatch 2 in the 22 OECD countries found evidence of the importance of institutional and structural factors that allow for flexibility in labour markets and in reduced barriers to business entry and closure.…”

“…There is substantial variation in the incidence of overeducation between countries (Di Pietro, 2002;Bárcena-Martín et al, 2012;Croce and Ghignoni, 2012;Verhaest and Van der Velden, 2013). While there has been a surge in the literature on overeducation (see McGuinness (2006) and Sloane (2003) for reviews), the majority of existing work tends to be specific to individual countries and to focus either on measuring the wage effects or on the determinants of country-level education-job mismatch.…”

Overeducation, Skills and Wage Penalty: Evidence for Spain Using PIAAC Data

“…It is a developed country supporting one of the largest percentages of overeducated workers (OECD, 2013a), a feature that was also observed before the current economic crisis (OECD, 2009;andVerhaest andResearch Institute of Applied Economics Working Paper 2014/11, pàg. 5 Regional Quantitative Analysis Research Group Working Paper 2014/06, pag.…”