Overeducation and Wages in Europe: Evidence from Quantile Regression

The overeducation literature has typically assumed that the effect of overeducation on wages is constant across the conditional wage distribution. In this paper we use quantile regression and data from 12 European countries to show that differences across segments of the distribution are indeed large. Moreover, we investigate to what extent overeducation is related to (the lack of) unobserved skills. By differentiating between segments of the distribution, we discriminate between groups of workers with different skills. We find that the detrimental effects of overeducation among the high-skilled are even larger than among the low-skilled. This finding lends support to the view that overeducation is an event that reduces the worker’s potential productivity, regardless of his skills.