Overqualification of graduates: Assessing the role of family background

Studies on the underlying mechanisms of social mobility commonly find that half of the intergenerational earnings persistence remains unexplained. Focusing on the phenomenon of overqualification, this study examines a transmission channel that might operate beyond the mechanisms previously analysed. I explore how the family background of university graduates affects the probability to hold a job that does not require a tertiary degree, i.e. to be overqualified. Potential pathways of the family background effects are discussed and proxy variables for the mediating factors cognitive skills, study characteristics, social capital, financial capital, and aspiration are incorporated into the empirical analysis. Graduates from families with a high socioeconomic status are found to be less likely to be overqualified. The unconditional social overqualification gap amounts to 7.4 percentage points. Non-linear Blinder-Oaxaca decompositions show that roughly 60% of the social overqualification gap can be attributed to group differences in observable characteristics. Differences in cognitive skills, study characteristics, and social capital are found to be important mediators of the family background effects.