Credential and Skill Mismatches Among Tertiary Graduates: The effect of labour market institutions on the differences between fields of study in 18 countries

Abstract:

This study provides new empirical evidence about tertiary graduates’ overeducation, by analysing the influence of labour market institutions on the incidence and distribution of the phenomenon across fields of study. In particular, the analyses focus on the level of employment protection, the regulation of access to the so-called liberal professions, and the propensity of welfare states to hire skilled workers. Data from two comparative surveys – REFLEX and HEGESCO – are used, and a wide set of information is employed to split overeducation in two forms of suboptimal allocation of individuals in the labour market: credential and skill mismatches. The first term refers to the mismatch between formal educational credentials and job requirements, whereas the second term refers to the mismatch between the skills acquired through education and those needed to perform a job. Results suggest that field of study differentials vary by country and that welfare and labour market institutions illuminate these cross-national variations. Moreover, the results support the claim that it is necessary to distinguish between credential and skill mismatches, showing that these institutional factors do not always affect them similarly.