Overeducation, undereducation, and the theory of career mobility: a comment and a note on underemployment

Abstract

Overeducated workers are commonly defined as having more schooling than required and more schooling than others in their occupations. Accordingly, the concept of overeducation compares the educational levels of workers within occupational categories. In subtle contrast, underemployed workers are employed in occupations requiring less education than the individuals have, comparing the occupational levels of workers with similar educational attainment. This subtle difference potentially leads to interpretation flaws. For example, Büchel and Mertens (2004) claim ‘overeducated workers in Germany have markedly lower relative wage growth rates than adequately educated workers.’ Since Büchel and Mertens control for educational attainment and not occupational levels, this statement and others are shown to be potentially flawed and subject to misinterpretation. Such statements need to clearly indicate that similarly educated individuals are being compared across occupational levels. This is because the common definition of overeducation suggests the opposite – that individuals with similar occupation levels are being compared across levels of schooling.

Notes

Cohn (1992) uses a similar approach in reconciling differences in earnings estimates found in various overeducation wage models.

The coefficient for Sicherman's (1991) schooling variable is negative while the coefficient for the overeducation variable is positive. The results suggest that an overeducated individual is more likely to observe career mobility relative to others in their occupation until the individuals are overeducated by slightly more than three years.

The results of Table 6 in BM are potentially subject to the same interpretation flaw; however the magnitude of the difference between the overeducation and schooling coefficients are considerably larger.