TOO MANY GRADUATES? A THEORY OF (EFFICIENT) EDUCATIONAL MISMATCH AND EVIDENCE FROM A QUASI-NATURAL EXPERIMENT

This paper analyzes the process driving graduate workers in undergraduate jobs. Micro and macro perspectives are considered so that the interrelationships between individual mismatch and over-education at the aggregate level are analyzed. The theoretical model highlights that individual mismatch does not necessarily imply that the share of graduates exceeds what is optimally required at the aggregate level. The empirical investigation tests to what extent the individual probability of mismatch is related to the availability of graduates in the labor market. A structural estimation is implemented using a quasi-natural experiment ideally provided by an exogenous expansion of higher education that took place in some Italian regions in the mid ?'90s. Difference-in-Differences models show that in this country an increase in the supply of graduates has actually reduced the individual probability of mismatch which is an effect rationalized by the theory.