Overqualification in European Labour Markets:Club Convergence and Its Determinants

Maria Karantali (), Theologos Pantelidis () and Theodore Panagiotidis
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Maria Karantali: Department of Economics, University of Macedonia, Greece., https://orcid.org/0000-0002-0137-3269
Theologos Pantelidis: Department of Economics, University of Macedonia, Greece., https://orcid.org/0000-0003-1511-0360

Discussion Paper Series from Department of Economics, University of Macedonia

Abstract: This study examines the evolution of overqualification across 28 European countries and investigates the macroeconomic and labour market factors shaping its persistence and cross-country differences. Using the Phillips–Sul club convergence methodology, we show that young workers in Europe exhibit multiple convergence paths, while experienced workers tend to converge towards a common equilibrium. We then identify the characteristics associated with convergence club membership using an ordered probit model and examine the short-run determinants of overqualification through a System GMM dynamic panel framework with regional interactions. The results highlight substantial heterogeneity across European labour markets: overqualification is persistent over time, and the effects of unemployment and unemployment benefits on skill mismatch vary between northern and peripheral European economies. These findings suggest that overqualification is shaped not only by individual characteristics but also by labour market institutions and macroeconomic conditions, with important implications for education, employment, and skills-matching policies in Europe.

Keywords: overqualification; European labour markets; unemployment; club convergence; system GMM estimation (search for similar items in EconPapers)
JEL-codes: C23 I28 J21 J24 (search for similar items in EconPapers)
Date: 2026-13, Revised 2026
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