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Who is overeducated and why? Probit and dynamic mixed multinomial logit analyses of vertical mismatch in East and West Germany

20.05.2014 | HWWI Research Paper | von Christina Boll, Julian Sebastian Leppin, Klaus Schömann

Overeducation is an often overlooked facet of untapped human resources.  But who is overeducated and why? Relying on SOEP data 1984-2011, we use  probit models for estimating the likelihood of entering overeducation  and dynamic mixed multinomial logit models with random effects  addressing state dependence and unobserved heterogeneity. As further  robustness checks we use three specifications of the target variable, i.e. realized matches, self-assessment and twofold overeducation. We run  separate analyses for men and women, East and West Germans and medium and highly educated persons. We find that overeducation is mainly state  dependent. Nonetheless, even in the dynamic context staying employed  proves to be risk-decreasing. By contrast, scars of past unemployment  show up in a higher mismatch risk. Moreover, an employer change does not  serve as a suitable exit strategy, and a dual qualification does not  show up as a valid insurance against graduates’ job mismatch. Overall,  effects largely depend on the operationalization of overeducation. We conclude that to combat overeducation, focusing on continuous employment  careers and circumventing unintentional withdrawals from the current  job is crucial. Moreover, institutional impediments that restrain job  match quality for certain groups (migrants, mothers) have to be tackled.