Overeducated Young Workers in Europe – The role of fields of study for vertical educational mismatch

In general, the term overeducation refers to a job match in which the educational level of the worker clearly exceeds the educational requirements of the job. In the terminology of labour economics, this is often considered a vertical skill mismatch, as opposed to horizontal mismatches (workers choosing jobs with requirements outside the scope of their field of study/apprenticeship). A widespread occurrence of this phenomenon can seriously impair the competitiveness of an economy. From a macroeconomic perspective, an overeducation status of qualified workers reflects a waste of scarce human capital. From a microeconomic perspective, it can affect a worker’s job satisfaction. In turn, a skill mismatch can reduce overall work motivation, expressing itself in more frequent absenteeism and higher turnover of the workforce. Moreover, overeducation is associated with earnings losses.

However, before being able to tackle the problem successfully, it is essential to understand the driving forces of overeducation at the individual level. In international comparison, the relevance of these driving forces might vary between countries and regions.

This study investigates the incidence of overeducation among graduate workers in 21 EU countries and its underlying factors based on the European Labor Force Survey 2016 (EU-LFS). Although controlling for a wide range of covariates, the particular interest lies in the role of fields of study for vertical educational mismatch. The study reveals country and gender differences in the impact of these factors. Compared to Social Sciences, male graduates from e.g. Education, Health and Welfare, Engineering, and ICT are less and those from e.g. Services and Natural Sciences are more at risk in a clear majority of countries. These findings hold for the majority of countries and are robust against a change of the standard education. However, countries show different gendered patterns of field-specific risks. We suggest that occupational closure, productivity signals and gender stereotypes answer for these cross-field and cross-country differentials. Moreover, country fixed effects point to relevant structural differences between national labour markets and between educational systems.

Chosen excerpts by Job Market Monitor. Read the whole story at IAB Discussion Paper Details | IAB