. This paper presents a review of the literature on overeducation. The paper assesses the consistency of overeducation within the context of a number of theoretical frameworks including Human Capital Theory (HCT) and Assignment Theory. The analysis goes on to discuss the various measurement controversies associated with the study of overeducation in order to provide an assessment of the extent to which the impacts of the phenomenon represent an economic reality as opposed to a statistical artefact. After reviewing the literature, it is concluded that the impacts of overeducation are likely to be non-trivial and that the phenomenon may potentially be costly to individuals and firms, as well as the economy more generally. The existence of overeducation also raises some doubts with respect to the validity of some of the central assumptions and predictions of HCT that are unlikely to be fully explained by gaps in the standard wage equation framework.

Overeducation in the Labour Market

Mismatches between workers’ competences and what is required by their job are widespread in OECD countries. Studies that use qualifications as proxies for competences suggest that as many as one in four workers could be over-qualified and as many as one in three could be under-qualified for their job. However, there is significant variation across countries and socio-demographic groups. Our meta-analysis of country studies suggests that over 35% of workers are over-qualified in Sweden compared with just 10% in Finland, with most other OECD countries located between these two extremes. There is also extensive evidence that youth are more likely to be over-qualified than their older counterparts and the same is found to be true for immigrant workers compared with a country’s nationals. On the other hand, no definitive evidence has been found of the persistence of qualification mismatch, with some papers showing that over-qualification is just a temporary phenomenon that most workers overcome through career mobility and others finding infrequent transitions between over-qualification and good job matches. Across the board, over-qualified workers are found to earn less than their equally-qualified and well-matched counterparts but more than appropriately-qualified workers doing the same job. Under-qualified workers are found to earn more than their equally-qualified and well-matched counterparts but less than appropriately-qualified workers doing the same job. Over-qualified workers are also found to be less satisfied about their job and more likely to leave their work than well-matched workers with the same qualifications….

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Over-qualified or under-skilled: a review of existing literature

One of the “truisms” of personnel selection is that overqualified applicants are likely to be a poor fit and thus experience low job satisfaction and performance and higher turnover. Recently, the issue of overqualification has come to the forefront because of the economic downturn, especially in some European Union countries where unemployment rates are extremely high. However, empirical research on overqualification in the industrial–organizational/organizational behavior literature is limited. In this article, we argue that although there may be drawbacks to overqualification for both organizations and employees, overqualification may also provide a number of positive outcomes for workers and employers alike. We review the limited research on overqualification, noting the positive and negative consequences of overqualification and the conditions under which overqualified employees may be a boon to organizations. We conclude by recommending some possible research streams to better understand the overqualification phenomenon and by making recommendations for organizational practices.

Overqualified Employees: Making the Best of a Potentially Bad Situation for Individuals and Organizations

This report adds to growing evidence of a global situation in which young people face increasing difficulties when entering the labour force. One of the principal findings of the report is that a global deficit of decent work opportunities has resulted in a situation in which one out of three youth in the world is either seeking but unable to find work (the unemployed), has given up on the job search entirely (the discouraged) or is working but still living below the US$2 a day poverty line (the working poor). This second version of the GET Youth (see also GET Youth 2004) updates the key world and regional youth labour market indicators, but offers original research as well, including a careful estimation of the number and share of youth who work but are living in households of less than US$1 or 2 a day (the so-called youth working poor). The working poor youth estimate can serve as a proxy for income-related underemployment and therefore fits nicely within the framework presented in the report for identifying youth who are most at risk to suffering from degrees of exclusion from decent work and therefore a framework for identifying whom would benefit most from targeted interventions.

Global Employment Trends for Youth, 2006

This paper analyses whether low‐skilled workers' training participation and task flexibility contribute to their firm‐internal and firm‐external mobility, and find that both training participation and task flexibility contribute only to firm‐internal employability. However, the workers' participation in training plays a much more explicit role in their firm‐internal career than their task flexibility does, as the former appears to be an important means to increase their opportunities in the firm‐internal labour market. Neither the low‐skilled workers' participation in training nor their task flexibility contributes to their external employability. Task‐flexible, low‐skilled workers are less likely to expect to be externally employable than non‐task flexible workers are. The focus of the low‐skilled workers on their firm‐internal employability can be explained by the fact that such workers usually have more opportunities to improve their position in the firm‐internal labour market than in the external labour market.

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Training, task flexibility and the employability of low‐skilled workers

This paper analyses the effects of both training and overeducation on upward mobility in the internal labour market, the professional market and the “supplementary labour market”. The latter segment can be considered as a broadly defined secondary labour market as it is not restricted to the low‐level unskilled jobs only. This broader definition – also found in initial segmentation theory – allows for the changed character of the secondary labour market in the industrialized countries. As expected, “career training” influences upward mobility positively. However, contrary to the predictions of segmentation theory, particularly in the supplementary labour market career training is a means of gaining promotion to a higher level job. Overeducation also affects upward mobility positively, which indicates that overeducation is to some extent a temporary phenomenon at the individual level. However, this also holds in particular in the supplementary segment of the labour market. The estimation results show that the supplementary labour market is less of a dead end than the segmentation theory predicts and is a more valuable place to get training than has been recognized. The supplementary market probably plays an important role in the transition process between initial education and the labour market. Although workers may be initially overeducated in their first jobs, a supplementary segment job could be an attractive step towards reaching a more suitable position in the labour market.

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The effects of training and overeducation on career mobility in a segmented labour market

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. This study has been carried out by the Research Centre for Education and Labour Market (ROA) as part of a long-range research project commissioned by the Ministry of Education and Sciences. The objective of the project is to develop an education/labour-market information system to help secondary and university students choose the right type of school and/or occupation (ROA 1988).



The study reported on here sets out to disclose the factors underlying the development of the occupational pattern. The shares of occupational classes in each economic sector are taken as points of departure. The explanatory variables are technological progress and cyclical and structural sectoral developments. For each occupational class, an estimation is made with the help of a linear model, the estimation method being that of Weighted Least Squares. To permit several variables to be included in the equation, the data have been pooled over sectors and time. In two fifths of all cases, a model with explanatory variables has been chosen; in the remaining instances a sector-dummy model was found to suffice.

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An explanation of the occupational structure of sectors of industry

The activities of the Research Centre for Education and the Labour Market (ROA) focus on increasing the transparancy of the match between education and the labour market. A special effort is made to generate information on the labour market prospects of occupational groups and the graduates from various types of education. This information is primarily intended to assist young people in choosing an occupation or training course. The information can also play a role in answering policy questions as regards tuning training facilities to the needs of the labour market and how best to harness the potential of the population’s qualifications to achieve economic growth.

Indicating the Future Labour Market Prospects of Occupational Groups and Types of Education in the Netherlands

. This article sets out to disclose the factors underlying the development of the educational structure of occupations. The shares of educational classes in the employment of occupations in economic sectors are taken as points of departure. The explanatory variables are technological progress and substitution processes generated by shifts in the skill structure of labour supply. For each educational class, an estimation is made with the help of a linear model, the estimation being that of Weighted Least Squares.

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R. Dekker

Papers

The effects of training and overeducation on career mobility in a segmented labour market

The effects of training and overeducation on career mobility in a segmented labour market

An explanation of the occupational structure of sectors of industry

Indicating the Future Labour Market Prospects of Occupational Groups and Types of Education in the Netherlands

An Explanation of the Educational Structure of Occupations