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Overeducation of Young Workers in Spain: How Much Does the First Job Matter? Social Indicators Research

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Abstract

This article contributes to recent overeducation literature on the impact of an initial education mismatch on workers’ future careers. Specifically, using the 2009 ad-hoc module of the Spanish Labour Force Survey, we quantify the differences in the probability of overeducation depending on the quality of individuals’ first match. To do this, we apply an extension of the recursive bivariate probit model, which allows potential endogeneity problems to be taken into account, as well as a dissimilar impact of the initial match for workers with different educational attainment. The results indicate that overeducation is a trap, since young workers who were mismatched in their first job are 40.2 percentage points more likely to be overeducated in a later one than those who were not. When decomposing this difference in two parts, one related to the pure effect of the initial mismatch and another one related to workers’ characteristics, we conclude that the pure effect is more important, and it depends on educational attainment.

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Notes

  1. Overeducation and overskilling are different concepts. While the former relates to an excess of education attainment relative to that required in a job, the latter implies that workers’ skills are not fully utilized in their job (Mavromaras et al. 2013; Flisi et al. 2016). However, as the methodologies applied to study their incidence and consequences are similar, in this paper we mention literature related to both mismatches.

  2. Mavromaras et al. (2013), without focusing on state dependence, highlight the importance of controlling the unobserved heterogeneity in order to accurately estimate the effect of different types of mismatches on other labour market outcomes, such as wages, job satisfaction and job mobility.

  3. In a contemporary cross-country analysis differentiating horizontal and vertical mismatches, Verhaest et al. (2015b) conclude that although generally educated graduates may start their career overeducated, they could more often be promoted to a higher position later.

  4. Some descriptive evidence on the differences in overeducation persistence across fields of study can be found in some other articles which focus on other overeducation consequences (Iriondo and Velázquez 2014).

  5. Roodman (2011, p. 175) demonstrates that treating \(y_{2}\) as an ordinary predetermined regressor produces the correct full-information maximum likelihood for the recursive bivariate probit model. This result holds in our model.

  6. This methodology provides a way to apply the Blinder-Oaxaca decomposition (Blinder 1973; Oaxaca 1973) to a non-linear function.

  7. An alternative decomposition can be obtained computing the pure effect using the average of initially non-mismatched workers, while the characteristics effect is obtained from \(\beta_{1}^{m}\).

  8. These observations only account for 2.9% of the excluded individuals.

  9. As we focus on overeducation, undereducated workers are joined to adequately educated ones. Moreover, the percentage of undereducated individuals in the sample is quite low (less than 9%).

  10. Before the Bologna Process, the Spanish education system distinguished short-cycle university degrees (three years) and long-cycle university degrees (more than three years, usually five).

  11. Following Rubb (2003), when an objective overeducation measure is considered, either a job change or a change in educational attainment is required for changing the quality of the match. Thus, a job change should be necessary since workers barely change their educational attainment during their career. This is an additional reason to restrict our main sample to those workers who change job.

  12. When calculating the marginal effects, the interaction between these two dummies and the four groups of specialization has been considered.

  13. The estimated coefficients are available upon request.

  14. In order to address the Moulton problem (Moulton 1986) related to including macroeconomics variables into individual level estimates, we have tried different clustering to allow the intragroup standard errors to be correlated, relaxing the usual assumption that the observations are independent. The results showed no relevant changes in the estimated standard errors; so the Moulton problem is not present.

  15. Klein (2010), for a sample of German graduates, also finds that university degrees in health experience the lowest risk of initial overeducation, while humanities show the highest one.

  16. Most previous research on overeducation in the Spanish labour market does not analyze regional differences. Some exceptions are Aguilar and Navarro (2003), Rahona (2008), and García-Montalvo (2009) finding different results on this issue.

  17. Additionally, we use 2004 as top year for finding the first job in Model III and 2008 as top year to find the current job in Model V. The results are very similar.

  18. This article compares unemployment and occupational status of university graduates in 22 European countries.

  19. The usual questionnaire of the LFS only contains a variable indicating if the worker has attended any course outside the education system in the previous 4 weeks. However, we have not included this variable in our final specification because the period considered is too restrictive and this training is not necessarily focused on acquiring or improving useful skills in the labour market.

  20. Ryan (2001) provides an interesting reflection on education policies following a cross-national perspective.

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Acknowledgements

We thank two anonymous referees for their insightful comments and suggestions, which have helped to improve this article considerably.

Funding

This paper was supported by Plan Propio de Investigación de la Universidad de La Laguna [1075/2015].

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  1. Departamento de Economía, Contabilidad y Finanzas, Universidad de La Laguna (ULL), La Laguna, Tenerife, Spain

    Juan Acosta-Ballesteros, María del Pilar Osorno-del Rosal & Olga María Rodríguez-Rodríguez

  2. Facultad de Economía, Empresa y Turismo, Universidad de La Laguna (ULL), Campus de Guajara, Apartado 456, 38200, La Laguna, Tenerife, Spain

    Juan Acosta-Ballesteros

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Acosta-Ballesteros, J., Osorno-del Rosal, M.d. & Rodríguez-Rodríguez, O.M. Overeducation of Young Workers in Spain: How Much Does the First Job Matter? Social Indicators Research. Soc Indic Res 138, 109–139 (2018). https://doi.org/10.1007/s11205-017-1643-z

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