Dynamics of Overqualification: Evidence from the Early Career of Graduates

This study analyses the persistence and true state dependence of overqualification, i.e. a mismatch between workers' qualifications and their jobs' educational requirements. Employing individual-level panel data for Germany, we find that overqualification is highly persistent among university graduates over the first ten years of their career cycle. Accounting for unobserved heterogeneity, results from dynamic random-effects probit models suggest that a moderate share of the persistence can be attributed to true state dependence. Unobserved factors are found to be the main driver of overqualification persistence. However, observed heterogeneity in terms of ability and study characteristics significantly contributes to overqualification persistence.

Erdsiek, Daniel (2021), Dynamics of Overqualification: Evidence from the Early Career of Graduates, Education Economics 29(3) , 312-340