Overeducation at the Start of the Career: Stepping Stone or Trap?

Abstract

This study investigates whether young unemployed graduates who accept a job below their level of education accelerate or delay the transition into a job that matches their level of education. We adopt the Timing of Events approach to identify this dynamic treatment effect using monthly calendar data from a representative sample of Flemish (Belgian) youth who started searching for a job right after leaving formal education. We find that overeducation is a trap. This trap is especially important early in the unemployment spell. Our results are robust across various specifications and for two overeducation measures.

Keywords: dynamic treatment, duration analysis, school-to-work transitions, underemployment, overqualification

JEL Classification: C21, C41, I21, J24, J64