Educational expansion and overeducation of young graduates: A comparative analysis of 30 European countries

Abstract

This study uses quarterly EU Labour Force Survey data for 30 countries over the period 2000 to 2016 to examine the relationship between changes in the composition of educational attainment and overeducation rates among new labour market entrants holding post-secondary and tertiary qualifications. We find that tertiary education expanded rapidly across our sample, while the proportion of young people with lower levels of education fell gradually throughout the period. Despite the significant increases in the percentage of young people educated to tertiary level, overeducation among new tertiary graduates fell. The descriptive evidence also suggests that some of the greatest declines in overeducation of young tertiary graduates occurred in the countries experiencing the most significant expansion in tertiary education. Overeducation rates among young graduates with upper-secondary and post-secondary (non-tertiary) education were lower in magnitude than overeducation of tertiary graduates and declined slightly over the period. Our GMM results confirm the negative relationship between educational expansion and overeducation for both tertiary and post-secondary graduates, and reveal a number of other factors potentially explaining cross-country variation in youth overeducation rates.