Educational mismatch and unemployment scarring

Purpose – The purpose of this paper is to investigate educational mismatch and its interrelationships with unemployment duration. Design/methodology/approach – The authors study unemployment histories of Italian workers using dependent competing risk models. The authors evaluate the impact of overeducation on wage using propensity score and treatment models. Findings – The authors show that overeducated have longer unemployment spells than their well-matched peers. This evidence implies that when assessing the impact of overeducation on wages, the duration of joblessness should be taken into account to evaluate possible additional unemployment scarring effects. The authors show that when controlling for unemployment spell duration the wage effect of overeducation significantly increases of about 7 percent. This result is supported by improvements in the sensitivity analysis. Originality/value – The findings are consistent with an interpretation of educational mismatch as a penalizing phenomenon in the individuals’ working life associated with long-term unemployment.