Overqualification and future labor market outcomes: Evidence from recent graduates in Portugal

Anabela Carneiro and Isabel Araujo

Portugal Stata Conference 2020 from Stata Users Group

Abstract: Using a sample of higher education graduates in Portugal, this paper analyses the career dynamics of workers who entered the labor market for the first time in a job for which they were overqualified. Exploring a large matched employer-employee data set over the 2006-2012 period, we provide evidence that overqualification is a persistent phenomenon where workers get trap. Six years after entering the labor market, 63% of the workers that entered overqualified remain in that status. Finally, even though, unconditionally, wages at entry are lower for overqualified workers when compared with the wages of well-matched workers, overqualified workers that were able to switch to a well-matched job over the analysed period exhibit a larger wage growth. Actually, taking into account workers observed and unobserved permanent heterogeneity, the estimates reveal that five years after entering the labor market overqualified individuals that were able to switch to a well-matched job experience a wage growth that exceeds the wage growth of their similar well-matched counterparts in 12 percentage points.

Date: 2020-08-20
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http://fmwww.bc.edu/repec/pcon20/Portugal20_Araujo.pdf

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Persistent link: https://EconPapers.repec.org/RePEc:boc:pcon20:3

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