The persistence of overeducation among recent graduates

Abstract

This paper tests whether overeducation at the beginning of a graduate's job career is a trap into continuing overeducation later on, or a stepping stone to a job that matches the candidate's qualifications. We focus on a sample of higher education graduates and shape the decision of accepting an overducated job in a dynamic treatment framework. We distinguish between apparent overeducation (i.e. overeducated only) and genuine overeducation (i.e. both overeducated and skills mismatch) and investigate the causal effect of both types of overeducation of future job outcomes. We find evidence that overeducation at the beginning of a career leads to a greater likelihood of being overeducated later on, with no real differences between apparent or genuine overeducation. Nonetheless, interesting national heterogeneities emerge, with Southern, Eastern and Continental graduates facing systematic trap into overeducation (genuine and apparent), while their UK peers are trapped only if they accept their first job immediately after graduation. For Scandinavian graduates, larger negative effects are found if they are apparently overeducated for their first job.