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The effect of overeducation on unemployment in OECD countries

Author

Listed:
  • McGrath, Connor

    (Monash University)

Abstract
The optimal allocation of human resources into different areas of the economy is vital for the growth and productivity of countries, particularly in a rapidly changing workforce environment. Previous literature and statistics indicate that overeducation (when an individual is overqualified for their career) lengthens unemployment at the individual level after graduation, among other negative outcomes. This study aimed to assess whether increasing the proportion of higher degree graduates affected the unemployment rate of countries in the subsequent year, using a differences in differences model. The study used graduation data from 2013-2018 in 23 countries. The results suggest that having more bachelor’s and master’s degree graduates increases the next year’s unemployment rate in countries with higher relative levels of overeducation, while increasing graduates from other degree types did not have this effect. This study was severely limited by a small sample size, but the results suggest further research on this issue is warranted.

Suggested Citation

  • McGrath, Connor, 2023. "The effect of overeducation on unemployment in OECD countries," Warwick-Monash Economics Student Papers 55, Warwick Monash Economics Student Papers.
    • Handle: RePEc:wrk:wrkesp:55
    as

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    File URL: https://warwick.ac.uk/fac/soc/economics/research/wmesp/manage/55_-_connor_mcgrath.pdf
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    References listed on IDEAS

    as
    1. SAM, Vichet, 2017. "Unemployment duration and educational mismatches: A theoretical and empirical investigation among graduates in Cambodia," MPRA Paper 87673, University Library of Munich, Germany, revised 11 Jun 2018.
    2. Hübner, Malte, 2012. "Do tuition fees affect enrollment behavior? Evidence from a ‘natural experiment’ in Germany," Economics of Education Review, Elsevier, vol. 31(6), pages 949-960.
    3. Marwa Sahnoun & Chokri Abdennadher, 2019. "Causality Between Inflation, Economic Growth and Unemployment in North African Countries," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 1, pages 77-92, March.
    4. Vichet Sam, 2018. "Unemployment duration and educational mismatches: An empirical investigation among graduates in Cambodia," Economics Bulletin, AccessEcon, vol. 38(3), pages 1554-1565.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Educational Attainment ; Returns to Education ; Unemployment JEL classifications: I21 ; I26 ; J6;
    All these keywords.

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers

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