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  • Print publication year: 2007
  • Online publication date: September 2009

7 - Overeducation in the labour market



One of the most important social developments of the past decades in western countries has been the increase in the educational level of the population. The increase in the education level of the workforce has been accompanied by higher than average growth rates for jobs for better-educated workers. Also, for a number of jobs there has been an upgrade in the skills needed to perform adequately. Despite this increase, we may ask whether the increase in the demand for better-educated labour has kept pace with the increase in the supply of skilled workers. If the growth in the supply of better-educated people outpaces the growth in demand, overeducation of the workforce is the likely result. Overeducation is defined as a job–worker match where the worker actually has more education than is required for the job (and conversely for undereducation). It is commonly measured in years. In 1981 Duncan and Hoffman started the overeducation literature by distinguishing education required for the job and actual education. In the 1980s Hartog (see Hartog and Oosterbeek, 1988) introduced the concept of overeducation in the Netherlands, and later continued to contribute (Hartog, 1993, 1997, 2000). At the end of the 1990s he concluded that the ORU specifications (based on over-, required, and undereducation) are useful extensions of the standard Mincer specification (see also chapter 1) but only if these specifications are embedded in structural labour models.

Surveying the literature of the past twenty-five years several explanations can be given for overeducation.

Blanchflower, D. and Oswald, A. (1994). The Wage Curve. Cambridge, MA: MIT Press.
Büchel, F. and Mertens, A. (2004). Overeducation, undereducation, and the theory of career mobility. Applied Economics, 36: 803–16.
Duncan, J. and Hoffman, S. (1981). The incidence and wage effects of overeducation. Economics of Education Review, 1: 75–86.
Groeneveld, S. and Hartog, J. (2004). Overeducation, wages and promotions within the firm. Labour Economics, 11: 701–14.
Groot, W. (1996). The incidence of, and returns to overeducation in the UK. Applied Economics, 28: 1345–50.
Groot, W. and Brink, H. Maassen (1996). Overscholing en verdringing op de arbeidsmarkt. Economisch Statistische Berichten, 4042: 74–7.
Groot, W. and Brink, H. Maassen(2000). Overeducation in the labor market: a meta-analysis. Economics of Education Review, 19: 149–58.
Groot, W. and H. Maassen van den Brink(2003). The dynamics of skill mismatches in the Dutch labor market, in Buchel, F., Mertens, A. and Grip, A. (eds.), Overeducation in Europe. Cheltenham: Edward Elgar Publishers, pp. 49–63.
Groot, W., Mekkelholt, E. and Oosterbeek, H. (1992). Further evidence on the wage curve. Economics Letters, 38: 355–59.
Hartog, J. (1993). On Human Capital and Individual Capabilities. Keynote speech to the European Association of Labour Economists, Maastricht, October.
Hartog, J.(1997). Wandering along the hills of ORU land, in Heijke, J. A. M., Education Training and Employment in the Knowledge-Based Economy. London: Macmillan.
Hartog, J.(2000). Over-education and earnings: where are we, where should we go? Economics of Education Review, 19: 131–47.
Hartog, J. and Oosterbeek, H. (1988). Education, allocation and earnings in the Netherlands: overschooling? Economics of Education Review, 7 (2): 185–94.
OECD (various years) Employment Outlook. Paris: Organization for Economic Cooperation and Development.
Rubb, S. (2003a). Overeducation: a short run or long run phenomenon for individuals? Economics of Education Review, 22: 389–94.
Rubb, S.(2003b). Overeducation in the labor market: a comment and re-analysis of a meta-analysis. Economics of Education Review, 22: 621–9.
Sicherman, N. (1991). ‘Overeducation’ in the labour market. Journal of Labour Economics, 9: 101–22.