Crowding Out in the Labour Market: Do Employers Lend a Hand?

34 Pages Posted: 18 Jan 2016

See all articles by Dieter Verhaest

Dieter Verhaest

Hogeschool-Universiteit Brussel (HUBrussel)

Elene Bogaerti

Ghent University

Jeroen Dereymaeker

KU Leuven

Laura Mestdagh

KU Leuven

Stijn Baert

Ghent University; University of Antwerp; Catholic University of Louvain (UCL); Institute for the Study of Labor (IZA)

Abstract

We test the basic assumption underlying the job competition and crowding out hypothesis: that employers always prefer higher educated to lower educated individuals. To this end, we conduct a randomised field experiment in which duos of fictitious applications by bachelor and master graduates are sent to real vacancies requiring only a bachelor degree. Our design allows to look at whether employers' preferences for overqualified versus adequately qualified applicants depend on the demand and supply context, sectoral activity and type of organisation, and characteristics of the posted vacancy. For the overall sample, we find that master graduates are 19% more likely to be directly invited for a job interview. Nonetheless, we conclude that eventual crowding out of bachelor graduates as a consequence of this selection policy is unlikely to be large since the advantage for master graduates is particularly observed for jobs with high overall invitation rates.

Keywords: job competition, recruitment, hiring, youth labour market, mismatch, underemployment, overqualification, field experiments

JEL Classification: I21, J24, M51

Suggested Citation

Verhaest, Dieter and Bogaerti, Elene and Dereymaeker, Jeroen and Mestdagh, Laura and Baert, Stijn, Crowding Out in the Labour Market: Do Employers Lend a Hand?. IZA Discussion Paper No. 9654. Available at SSRN: https://ssrn.com/abstract=2716595

Dieter Verhaest (Contact Author)

Hogeschool-Universiteit Brussel (HUBrussel) ( email )

Stormstraat 2
Brussels, 1000
Belgium

Elene Bogaerti

Ghent University

Coupure Links 653
Gent, 9000
Belgium

Jeroen Dereymaeker

KU Leuven

Oude Markt 13
Leuven, 3000
Belgium

Laura Mestdagh

KU Leuven

Oude Markt 13
Leuven, 3000
Belgium

Stijn Baert

Ghent University ( email )

University of Antwerp ( email )

Prinsstraat 13
Antwerp, Antwerp 2000
Belgium

HOME PAGE: http://https://www.uantwerpen.be/nl/personeel/stijn-baert/

Catholic University of Louvain (UCL) ( email )

Place Montesquieu, 3
Louvain-la-Neuve, 1348
Belgium

HOME PAGE: http://https://www.uclouvain.be/en-309318.html

Institute for the Study of Labor (IZA) ( email )

P.O. Box 7240
Bonn, D-53072
Germany

HOME PAGE: http://www.iza.org/en/webcontent/personnel/photos/index_html?key=6832

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
30
Abstract Views
246
PlumX Metrics