Are Poles stuck in overeducation? Individual dynamics of educational mismatch in Poland

ABSTRACT

The paper investigates the short-run job mobility of educationally mismatched workers, examining the validity of the Sicherman-Galor hypothesis, which predicts that overeducation is a temporary condition from a worker’s perspective associated with higher upward occupational and wage mobility. The study uses data from the Polish Labour Force Survey, investigating yearly changes in employment status, occupation, and wages. The results show that overeducated workers are more likely to remain employed compared to their properly matched colleagues. Both overeducated and undereducated workers tend to move towards jobs for which they are better matched. However, the rate of this adjustment is very low, contradicting the Sicherman-Galor hypothesis. On the other hand, overeducated workers, but mostly prime-aged ones, are found to experience faster wage growth compared to properly matched individuals, aligning with the Sicherman-Galor hypothesis. The higher wage growth of overeducated workers can be partially attributed to workers improving their match status over time.

JEL CODES:

• I21
• J24

KEYWORDS:

• overeducation
• educational mismatch
• occupational mobility
• wage mobility

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 Contrary to overeducated workers, undereducated workers have a level of schooling that is below what is required for their occupations.

2 By controlling for workers’ actual schooling, as Sicherman (1991) originally did, overeducated workers are compared to properly matched workers with the same level of schooling. Since Robst’s critique, most studies control for the level of schooling required for a given occupation, so that overeducated workers are compared to their properly matched colleagues in occupations requiring the same level of schooling.

3 However, because Frei and Sousa-Poza used workers’ subjective declarations to identify overeducation, changes in the mismatch status were weakly associated with actual job changes. 87% of individuals who moved out of subjectively reported overeducation did not change their job or employer. This suggests that subjectively perceived mismatch might be less persistent than mismatch identified with other methods.

4 However, Rubb’s study has some apparent issues that limit the clear interpretation of the results. Firstly, the methodology based on realized matches, calculated separately for each of the two periods, allows education requirements to vary. As a result, the flows in and out of overeducation might be, to some extent, a purely statistical effect. Secondly, there is also a small share of individuals who reported a decrease in their education level between periods.

5 ORU is an acronym standing for overeducation, required education, and undereducation. It refers to the way of representing a worker’s years of education as a sum of years which are required in their job, and either excess (for overeducated workers) or lacking ones (for undereducated workers).

6 Precisely, in the Verdugo & Verdugo method the required level of education is a mean value of schooling plus/minus one standard deviation.

7 Although, to my knowledge, there is no other study on overeducation which uses median values to calculate required schooling, I purposely use this method, along with other two, to demonstrate that the different operationalization of the realized matches approach does not change the findings and the median method can substitute for the other two.

8 On the other hand, one can argue that the technological change leads to an increase in skill and education requirements within occupations over time. However, given the limited timeframe of analysis spanning from 2011 to 2018, this appears to be a relatively minor issue.

9 Unfortunately, the Polish Labour Force Survey does not cover a worker’s other characteristics that some studies identify being associated with educational mismatch such as the quality of received education (Robst, 1995b) or socio-economic family background (Capsada-Munsech, 2015; Erdsiek, 2016). This could potentially lead to a problem of omitted variables bias.

10 Nevertheless, studies on overeducation usually do not address selection issue (Vera-Toscano & Meroni, 2021).

11 For the sake of simplicity, I assume that a worker’s actual schooling does not improve in the second period, so changes in required schooling perfectly translate into changes in educational mismatch.

12 Note that the calculation of education requirements is based on a pooled sample. Consequently, each occupation is assigned the same required level of schooling for each year.

13 Similarly, Dolton and Vignoles (2000) find that sample selection has a negligible effect on the overeducation coefficients.

14 Similarly, Korpi and Tåhlin (2009) found that excess schooling adds to wage dynamics a half as required schooling when the initial wage level is included as a control (see results of model 4 in Table 5 in their paper).

15 With a negative change in required schooling and the negative coefficients, the impact is positive.

16 Moreover, there is evidence of overeducation improving firm-level productivity (Kampelmann & Rycx, 2012; Mahy et al., 2015).

Additional information

Funding

Research was funded by the Polish National Science Centre grant under the contract number DEC-2016/23/N/HS4/03626.

Notes on contributors

Jan Aleksander Baran

Jan Aleksander Baran is a Ph.D. candidate in economics at the University of Warsaw.