Is there a problem of graduate

overeducation? !

Overview!
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Deni&ons;
Methodology;
Does overeduca&on impact on the following elds?
Wage penal&es;
Job sa&sfac&on;
Job Mobility/Job quiAng;
Job mismatching;
Does overeduca&on have an impact on produc&vity;
Does overeduca&on have a s&gma eect?
Policy;
References.

Definitions!
Sloane, Peter J. (2014 November)

Types of job/educa0on mismatch

Overeducated: An individual has completed more years of
educa&on than the current job requires.

Overqualied: An individual holds a higher qualica&on
than the current job requires.

Overskilled: An individual is unable to fully use acquired
skills and abili&es in the current job.

Ver0cal mismatch: The level of educa&on or skills is less or
more than the required level.

Different methodology!
Cross Section Data!
Provide information at just one
point in time;!
Have predominated in the
literature.!

Panel Data estimations!

have distinct advantages over
cross-section analysis: !
reduce the size of many of the
coecients, throwing doubt on the
results of cross-sectional analyses;!
show that the relationship between
job mismatch and labor market
outcome is strongly influenced by
unobserved individual dierences. !

Wage Penalties!
In the past: Cross sectional studies show that there is a !
negative wage impact for male college graduate who are over
educated only or over skilled only. !
Now: Only male graduates that change from a wellmatched job to one for which they are both overeducated
and overskilled suer a wage penalty.!

Job satisfaction!
Job satisfaction is treated as an outcome of
mismatch!
Where
! a mismatch does not reduce job satisfaction, it is likely that the
mismatch reflects a voluntary underutilization of qualifications or skills.!

Overeducation!
!
No eects on job satisfaction!

Overskilling!
Alone or combined with overeducation quickly reduces job
satisfaction!
!
According to the Cross section model this is true and with a
rate of 22%;!

According to the Panel Cross data: the rate is about 6,9%

data and considering overeducation and overskilling
together: 15,2% !

Job mobility
Job quitting!
Only overeducation on its own, or jointly with overskilling increases the
probability of quitting as a consequence of job mismatching. !
!
Why?!
- Workers may temporarily accept jobs for which they are overqualified in order to gain
training and experience for a next better job (John Robst, 1995).!
!
Male college graduates who are overskilled only are no more likely to quit than are male
graduates who are well matched, after the analysis controls for unobserved individual
dierences.!
!
Overskilling alone has not a significant impact on job quitting!

Persistence of job mismatch!

Some studies have suggested that overeducation may be a form of investment in

training or experience that can boost future returns to human capital. !
!
If true, this would mean that mismatch was a temporary phenomenon, which
would greatly reduce the need for policy intervention. !

Propensity of mismatched
workers to remain in
mismatched jobs!
The eect of previous overskill mismatches on present overskilling mismatches is positive but diminishes
over time.!
Example: A college graduate who has never been overskilled for a job has a 4.6% probability of becoming
overskilled in the following year. By contrast, a college graduate who was overskilled in each of the previous
three years has a 38% probability of being overskilled in the following year. !
Data suggest:!
High persistence or a scarring eect from being in an overskill mismatch;!
Less persistence of mismatching for college graduates in mismatching jobs compared to other workers;!
A greater wage penalty for college graduates.!
!
Public policy therefore needs to consider not only the extent and persistence of skill mismatch, but also
the size and persistence of the associated wage eects of such persistence if the problem is to be targeted
eciently.!

Does overeducation have an

impact on productivity
Kampelmann; Rycx (2012 December)!

Higher level of education: positive eect on productivity all over the

career, because of the skills acquired; a higher level of required educa&on
exerts a signicantly posi&ve inuence on rm produc&vity
!
Additional years of education : beneficial eect on productivity;!
!
Additional years of under education: detrimental for productivity;
workers tend to compensate the lack of skill with more experience.!
- Under- educated workers either succeed to compensate their lack of
produc&vity by addi&onal work experience and training or end up in less
demanding jobs as they get older;

!
It is not totally excluded a positive correlation between job satisfaction and
productivity.!
!

Does overeduca0on have a s0gma

eect?
S0jn Baert and Dieter Verhaest (November, 2014) simulated the
applica&on of three c&&ous candidate to real job vacancies in Belgium.

Prole dierences:
- Graduated few months before the applica&on 27% of posi&ve
answers;
- Graduated one year earlier but unemployed since then 22% of
posi&ve answers;
- Graduated one year earlier and employed in a job with two levels
below his educa&on - 25% of posi&ve answers.

The data indicate that mismatched workers are more likely to have a
posi0ve answer than unemployed workers.

Policy!
Public policy makers should consider: !
1. The mismatch amplitude and duration;!
2. The impact and the persistence of the eects
on the wage;!
3. Overskilling issue more than overeducation;!
4. Employers should be informed of the
potential negative eects of overskilling.!

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References
Sloane, Peter J. Overeduca&on, skill mismatches, and labor market
outcomes for college graduates (2014 November) Retrieved November 24,
2014 from Ins&tute for the Study of Labour, h9p://www.Iza.org

Kampelmann, Stephan; Rycx, Franois The impact of educa&onal mismatch
on rm produc&vity: Evidence from linked panel data (2012 December)
Retrieved November 24, 2014 from Econstor, h9p://www.econstor.eu

Robst, John. "Career mobility, job match, and overeduca&on." Eastern
Economic Journal (Fall 1995): 539-550. Retrieved November 24, 2014 from
hkp://college.holycross.edu

Baert, S&jn, and Dieter Verhaest. "Unemployment or overeduca&on: which is
a worse signal to employers?." (2014 - July). Retrieved November 24, 2014
from from Econstor, , h9p:// www.econstor.eu






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