. 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

https://www.collegetransitions.com/wp-content/uploads/2014/05/robst-relatedness-of-college-major-and-work.pdf

Education and job match: The relatedness of college major and work

This paper surveys the economics literature on overeducation. The original motivation to study this topic were reports that the strong increase in the number of college graduates in the early 1970s in the US led to a decrease in the returns to college education. We argue that Duncan and Hoffman's augmented wage equation the workhorse model in the overeducation literature in which wages are regressed on years of overschooling, years of required schooling and years of underschooling is at best loosely related to this original motivation. We discuss measurement and estimation issues and give an overview of the main empirical findings in this literature. Finally we given an appraisal of the economic lessons learned.

https://papers.ssrn.com/sol3/Delivery.cfm/dp5523.pdf?abstractid=1771245&mirid=2

Overeducation and Mismatch in the Labor Market

We report increasing dispersion in the returns to graduate education in Britain, and relate this development to rising overqualification. We distinguish ‘Real’ and ‘Formal’ overqualification, according to whether it is accompanied by underutilization of skill. Employees in the former group experience greater, and more sharply rising, pay penalties than those in the latter group. Real Overqualification, but not Formal Overqualification, is associated with job dissatisfaction. While Formal Overqualification has been increasing over time, Real Overqualification has been steady or rising only slowly. The normative implication drawn is that the state should provide regular information on the distribution of the returns to graduate education.

/pdf/overqualification-job-dissatisfaction-and-increasing-48gorw9796.pdf

Overqualification, job dissatisfaction, and increasing dispersion in the returns to graduate education

“I Have a Job, But . . .”: A Review of Underemployment

Overeducation in the labor market: a comment and re-analysis of a meta-analysis

Overeducation: a short or long run phenomenon for individuals?

Using 1990 US census data, the present paper examines the relationship between overeducation and earnings. The paper updates previous findings and then focuses on those most likely to be overeducated--individuals with post-college schooling. It is hypothesized that specific occupations that require college education may be flexible in their ability to utilize the surplus human capital of the employees. Being overeducated is shown to increase the wages of men working at a job that requires a bachelor's degree. The results are compared with findings in Canada and the UK. Additionally, overeducation is shown to contribute to the gender wage gap.

Post-College Schooling, Overeducation, and Hourly Earnings in the United States

Contrary to expectations, the likelihood of overeducation is shown to be inversely related to unemployment rates when not control for selectivity. Furthermore, incidence data show that overeducation is more common among men than women and among Whites than Blacks. At issue is selectivity: employment must be selected for overeducation to occur. When using bivariate probit with sample selection models, the likelihood of overeducation is found to be positively related to local unemployment rates, higher for women than men, higher for mothers of young children than other women, and lower for fathers than other males. Race, not speaking English very well, and having a disability are found to have a greater impact on the likelihood of overeducation than incidence data suggest.

Factors influencing the likelihood of overeducation: a bivariate probit with sample selection framework

Overeducated workers are commonly defined as having more schooling than required and more schooling than others in their occupations. Accordingly, the concept of overeducation compares the educational levels of workers within occupational categories. In subtle contrast, underemployed workers are employed in occupations requiring less education than the individuals have, comparing the occupational levels of workers with similar educational attainment. This subtle difference potentially leads to interpretation flaws. For example, Buchel and Mertens (2004) claim ‘overeducated workers in Germany have markedly lower relative wage growth rates than adequately educated workers.’ Since Buchel and Mertens control for educational attainment and not occupational levels, this statement and others are shown to be potentially flawed and subject to misinterpretation. Such statements need to clearly indicate that similarly educated individuals are being compared across occupational levels. This is because the common defi...

Overeducation, undereducation, and the theory of career mobility: a comment and a note on underemployment

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