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

Dieter Verhaest, Elene Bogaert, Jeroen Dereymaeker, Laura Mestdagh and Stijn Baert
Additional contact information
Elene Bogaert: Ghent University
Jeroen Dereymaeker: KU Leuven
Laura Mestdagh: KU Leuven

No 9654, IZA Discussion Papers from Institute of Labor Economics (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: underemployment; mismatch; youth labour market; hiring; recruitment; job competition; overqualification; field experiments (search for similar items in EconPapers)
JEL-codes: I21 J24 M51 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2016-01
New Economics Papers: this item is included in nep-hrm and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published - revised version published as 'Do Employers Prefer Overqualified Graduates? A Field Experiment' in: Industrial Relations: A Journal of Economy and Society , 2018, 57 (3), 351 - 388

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