THE DYNAMICS OF SKILL MISMATCHES IN THE DUTCH LABOR MARKET

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1 THE DYNAMICS OF SKILL MISMATCHES IN THE DUTCH LABOR MARKET Wim Groot* Department of Health Sciences, Maastricht University and "Scholar" Research Centre for Education and Labor Market Department of Economics, University of Amsterdam Henriëtte Maassen van den Brink** "Scholar" Research Centre for Education and Labor Market Department of Economics, University of Amsterdam Keywords: over, mobility JEL classification: J24 J31 J41 Abstract We use two waves of a Dutch longitudinal survey to analyze the dynamics of over. It is found that the dynamics in over are high. Only a small fraction of workers are long-term overeducated. Job to job mobility seems to act as a way out of over, internal mobility within the firm does not. We also find evidence to suggest that over compensates for lack of experience and tenure. Overeducated workers are more likely to search for other work. However, over does not improve the chance of finding other work. * Address: Wim Groot, Department of Health Sciences, Maastricht University, P.O. Box 616, 6200 MD Maastricht, The Netherlands. Phone: /1727; Fax: ; w.groot@beoz.unimaas.nl. ** Address: Henriëtte Maassen van den Brink, Scholar, Department of Economics, University of Amsterdam, Roetersstraat 11, 1018 WB Amsterdam, The Netherlands. Phone: ; Fax: ; hmvdb@fee.uva.nl.

2 1 1 Introduction There is a growing literature on the incidence and returns to over. Groot & Maassen van den Brink (2000) provide a meta-analysis of over studies. The overall incidence of over in all studies included in this meta-analysis is about 26%. The incidence of over also appears to be stable over time: the percentage of workers that are overeducated does not seem to have changed significantly over the past decades. Most of the research on over is motivated by the concern that the rise in the al attainment of the labor force may have outpaced the growth in jobs for higher educated workers. If so, higher educated workers may have displaced lower skilled workers. Workers are overeducated if the skills they bring to their job exceed the skills required for that job. With over the allocation of skills over jobs is less than optimal. The result is that al skills are underutilized. From an al policy point of view this may implicate that too many resources are spent on (higher). Two possible explanations can be given for the existence of over. First, over may be a compensation for lack of other human capital endowments, such as ability, on-the-job training or experience. This hypothesis is empirically tested in Groot (1993). In this paper it is found that correctly allocated workers have the highest probability of participation in firm-related training, while this probability is lowest for undereducated workers. No evidence is found for over and firm-related training being either substitutes or complements. These findings do not seem to support the compensation hypothesis. Support for the compensation hypothesis is found in Groot & Maassen

3 2 van den Brink (1996). This study finds that workers who have experienced a career interruption - such as women with dependent children - are more likely to be in jobs for which they are overeducated. This also suggests that over compensates for lack of other productive skills (in this case loss of human capital due to career interruptions). Similar conclusions can be drawn from Groot (1993, 1996) and Sicherman (1991). These studies find that overeducated workers have less experience, tenure and on-the-job training than correctly allocated workers. In Groot & Maassen van den Brink (1997) it is found that on balance misallocations on the labor market tend to decrease with labor market experience. Simulations indicate that an increase in age and experience of all workers in the labor market decreases both years of over and years of under. This also suggests that over is for many workers a temporary phenomenon. The second explanation is that over is part of a career mobility or insertion process in the labor market. Workers may enter the labor market in jobs for which they are overeducated and later on move to jobs that better match their al attainment. Sicherman (1991) hypothesizes that over may be part of a career mobility process. Workers temporarily accept jobs for which they are overeducated in exchange for training that helps them in their future career. Robst (1995), Dekker, De Grip & Heijke (2002) and Büchel & Mertens (2003) provide a test for the career mobility hypothesis. Robst (1995) finds that overeducated workers are more likely to move to better jobs over time. However, contrary to the career mobility hypothesis, overeducated workers are less likely to say that the skills that they acquire will help them in their future jobs. In Sicherman (1991) it was also found that overeducated workers change jobs more frequently. This supports the hypothesis that over is part of a phase of insertion and adaptation in the early stages of the working life.

4 3 Dekker, De Grip & Heijke (2002) analyze the effects of over and training on promotion within the firm. It is found that over has a positive effect on the probability of being promoted to a higher level job. They conclude from this that over is partly a temporary phenomenon. Contrary to this, Dolton & Vignoles (2000) find that a significant portion (30%) of university graduates are overqualified six years after graduation. The findings in Büchel & Mertens (2003) also point at rejection of the career mobility hypothesis. Using data for Germany this study finds that overeducated workers are less likely to experience upward occupational mobility or above average wage growth than correctly allocated workers. This study further finds that overeducated workers are less likely to receive on-thejob training and are less likely to learn things that are beneficial for promotion. Groot & Maassen van den Brink (1997) find evidence that supports the career mobility or insertion hypothesis. This study concludes that the incidence of over is higher among younger age cohorts, but that this effect is off-set by the fadening of over with years of labor market experience. Groot (1996) and Groot & Maassen van den Brink (1996) find that - after controlling for experience - younger workers are more likely to be overeducated than older workers. In conclusion, the evidence on the career mobility hypothesis is mixed. There is some indirect evidence to support this hypothesis. However, more direct tests point at a rejection of the career mobility hypothesis. With internal labor market and hiring on the external labor market for entry positions only, workers may enter the labor market in a job for which they are overqualified, gradually move to a job which matches their qualifications, and eventually - after acquiring the necessary human capital through experience

5 4 and on-the-job training - end up in a job for which they are underqualified. If this is true, we may expect that over decreases with internal mobility (promotion) and tenure at the firm. In that case, over is only a temporary state of affairs and can be seen as part of an insertion process in the labor market. Persistent over on the other hand may reflect a cohort effect. If the growth in the level of the labor force is greater than the growth in the al quality of jobs, higher educated workers may displace lower educated workers and over will increase. For the younger, higher educated cohorts there are relatively less high qualified jobs than for the older cohorts. Younger cohorts are therefore more likely to be permanently in jobs for which they are overeducated. The question addressed in this paper is what determines the dynamics of jobskill mismatches in the labor market? To answer this question we look both at the determinants of the incidence of over, and the determinants of the entry in and exit from over. The data we use are taken from a large longitudinal sample for the Netherlands, the OSA Labor Market survey The availability of longitudinal data allow us to control for unobservable individual heterogeneity in the incidence of over. We account for unobservable individual heterogeneity in the incidence of over by estimating random effects probit models. Some light is shed on the dynamics of over by testing whether the impact (i.e. the coefficients) of some essential variables such as job-to-job mobility and internal mobility within the firms on the incidence of over varies between individuals. Next we analyze the determinants of the entry in and the exit from over. Transitions in and out of over are estimated with a

6 5 Markov type model. These analyses allow us to answer whether the determinants of the transition into over (conditional on not being overeducated) differ from the determinants of the transition out of over (conditional on being overeducated). This gives us another perspective on the dynamics of over. Thirdly we distinguish between different degrees of over, i.e. workers who are overeducated in one of the two periods we observe, workers who are overeducated in both periods and workers who are overeducated in neither of the two periods. We use a multinomial logit model to analyze the determinants of the persistence of over. Finally, we look at the reverse effects: does over have an impact on labor market dynamics. Probit equations are estimated to determine the impact of over on the chance of job-to-job mobility and promotion? 2 Data and definition of over The data for the empirical analysis are taken from the sixth and the seventh wave of the Dutch OSA-Labor Market Survey, conducted in the Fall of 1994 and 1996 respectively. The OSA-Labor Market Survey is in part a longitudinal survey of individuals who participated in one of the five previous waves, which were conducted bi-annually between 1985 and Because of sample attrition, the longitudinal part of each wave of the survey is supplemented by observations from a cross-section of the population aged years. We select individuals who are in paid employment at the time of interview. The total sample size is 3917 observations. In the transition models only the respondents are included who participated in both the 1994 and the 1996 wave of the survey. This reduces the sample size to 1861 observations.

7 6 Over is based on a self-report on skill mismatches by the respondents of the OSA-survey. Workers are first asked to assess the quality of the match between the job and their ("How do you evaluate the match between your work and your? Is this good, reasonable, poor or bad "). Workers who do not qualify the match as being good are then asked in what respect the match is less than optimal. They can indicate if their level is higher than required for the job and if their level is lower than required for the job. 3 Results Descriptive analyses In Table 1 some descriptive statistics are presented on the dynamics of skill mismatches. From Table 1 we can conclude that the incidence of over is fairly stable over time: both in 1994 and 1996 around 10% of the workforce classified themselves as being overeducated. Underlying this stability in the incidence of skill mismatches is a fair amount of dynamics, however. Table 1 shows that more than 40% of the workers who were overeducated in 1994 were no longer overeducated in Of the workers who were not overeducated in 1994, a little over 5% classified themselves as such two years later. Next we turn to the explanatory analyses. In the equations we control for a number of individual, job and firm related characteristics. We include seven

8 7 dummy variables for the highest level attained. Other individual characteristics include: gender, marital status, hours of work, age, tenure and a dummy for the year of observation (when applicable). The job related characteristics include dummy variables for the amount of induction training required for the job, the number of workers supervised and whether the worker received firm-related training during the two year preceding the interview. We also include a variable for the job level. This variable runs from 1 (simple work) to 5 (complex and specialized work). The firm related characteristics are seven dummy variables for industry and a variable for firm size. Finally we include two variables for mobility: one for job to job mobility and one for mobility within the firm. We expect the incidence of over to increase with level and to decline with job level. Other indicators of the complexity of the job such as the amount of induction training needed and the number of workers supervised are also expected to have a negative effect on the incidence of over. If over is a substitute for the lack of other productive characteristics, we expect negative effects from hours of work, tenure, age and participation in firm-related training. If mobility is towards a better allocation between skills supplied and skills required, we expect that job-to-job mobility and internal mobility both have a negative effect on the incidence of over. Random effects model To analyze the determinants of over a random effect ordered probit model is estimated. A random effects model allows us to assess whether the impact of relevant variables such as job-to-job mobility, internal mobility within the firm, job level and tenure on the incidence of over varies between individuals. It also gives us an estimate of the inter-temporal

9 8 correlation of over. The random effects model is estimated by maximum marginal likelihood estimation (see Agresti & Lang 1993). For details about the maximum marginal likelihood estimation procedure, see Hedeker & Gibbons (1994). The estimation was done with MIXOR, a Fortran based computer program for mixed-effects ordinal regression analysis (Hedeker & Gibbons 1996). The parameter estimates of the random effects probit equations on over are found in Table 2. The probability of being overeducated increases with the level of and decreases with job level as expected. We further find that the incidence of over decreases with hours of work and tenure at the current firm. If part-time workers are less productive than full-time worker and productivity increases with tenure these findings are consistent with the view that over compensates for lack of other productive characteristics. Relative to workers in jobs that require more induction training, workers in jobs that require only one day of induction training are more likely to be overeducated than workers in jobs that require more induction training. However, this finding is conditional on the complexity of the job as measured by the job level. We further find no statistically significant differences in the incidence of over between industries, by firm size and between male and female workers. We do find a statistically significant effect of marital status: workers who are married or cohabiting are less likely to be overeducated. A possible explanation for this is that married workers have more financial obligations and are therefore more keen on searching for a better paying job that that match their skills. If we look at our mobility variables we find that neither a change of employers in the two years prior to the interview (job to job mobility), nor a change of jobs with the same employer during this period (internal mobility) has a statistically significant effect on being overeducated.

10 9 We further find that the intercept term and the coefficients for tenure and job level should be treated as random effects, i.e. the impact of these variables on over varies over individual workers. The inter-temporal correlation coefficient is 0.54, indicating that over in the first period is strongly but not perfectly correlated with being overeducated in the second period as well.1 Both for tenure and job level we find that the variance terms are about the same size as the coefficients for tenure and job level. This indicated that the differences in the impact of tenure and job level between individuals are relatively large. The variances of the coefficients for job to job mobility and internal mobility are both statistically not significant, indicating that there is little variation in the effects of both variables on over. Fixed effects model Next we estimate some fixed effects probit equations on the transition in and out of over (Markov model). With the fixed effects model, all variables that do not change over time drop out of the equation. We therefore only include variables that (may) change during the period , i.e. whether the worker received firm-related training between 1994 and 1996, whether the worker changed employers (Job to job mobility), and whether the worker changed jobs within the firm (Internal mobility). The parameter estimates are found in Table 3. The only variable with a statistically significant effect is Job to job mobility in the equation from over in 1994 to another state in The coefficient indicates that for workers who are overeducated in 1994 a change of employers increases the 1 The inter-temporal correlation coefficient is calculated as: σ / (1 + σ), where σ is the variance of the intercept term.

11 10 probability of not being overeducated in 1996 by 36%. Next we estimate transition equations in and out of over that include a larger number of explanatory variables. All explanatory variables are taken in their 1994 values. The parameter estimates are found in Table 4. We find that a higher level increases the probability of a transition into over and decreases the probability of an exit from over. Longer working hours (a full-time job), a longer tenure at the current firm and a higher job level decrease the probability of becoming overeducated. Older workers who are overeducated in 1994 are less likely to exit this state than younger workers. A higher job level in 1994 increases the probability of exiting from the state of over. Finally, if we look at the two mobility variables we find a positive effect of job-to-job mobility on the probability of exiting from over (this is similar to the effect found in Table 3, although the size of the coefficient is somewhat smaller). We further find that internal mobility increases the probability of becoming overeducated. There are some differences between the results of the random effects estimates on the incidence of over (Table 2) and the fixed effects estimates in Table 4. For example, the random effects estimates do not show that job-to-job mobility or internal mobility have a statistically significant effect on over, while the fixed effects estimates show that job-to-job mobility significantly increases the probability of exiting from the state of over while internal mobility increases the probability of becoming overeducated. A possible explanation for these seemingly contradictory findings is misspecification of random effects equation. If the individual specific effect in the over equation is correlated with job-to-job or internal mobility,

12 11 estimates of the random effect equations may be biased. It may well be that the individual specific effect that increases the likelihood of being overeducated increases or decreases the chance of mobility as well. Multinomial logit model on the persistence of over For more insight in the persistence of over, we created a new variable that distinguishes between workers who are neither in 1994 nor in 1996 overeducated, workers who are overeducated in only one of these two years, and workers who are overeducated in both of these years (persistent overeducated workers). A little over 4% of the workers in our sample are classified as long-term or persistent overeducated. About 11% is overeducated in only one of the two years of observation, while 85% is overeducated in neither of the two years. For the explanatory analyses, we estimate a multinomial logit model to determine what affects persistent over. All explanatory variables are taken in their 1994 values. The results in Table 5 show that persistent over (i.e. being overeducated in both 1994 and 1996) increases with, is higher for workers in jobs that require little or no induction training, is lower for workers who are married and for workers in larger firms and in higher job levels. Finally, we find that job-to-job mobility in the two years prior to 1994 reduces the probability of persistent over. Does over affect mobility? So far we have focused our attention on the effects of internal and external mobility on the incidence of over. It may well be that there is a reverse effect as well. On the one hand overeducated workers may be more inclined to search for another job. On the other hand, if over indicates that the worker s performance is below average or if over is

13 12 taken as a signal by other employers of sub-standard performance, over may impede job mobility. First we look at the relation between job search and over. We combine information on over and job search of both the 1994 and 1996 sample. In both samples workers are asked whether they are currently actively searching for another job. The cross tabulation of job search and over is found in Table 6. A little over 8% of the workers say that they are actively searching for something else. Overeducated workers are searching for another job more frequently than workers who are not overeducated. Of the overeducated workers 19.5% is searching for another job, while this is only 7.0% among workers who are not overeducated. Next we analyze whether over has an effect on job mobility. We look at both external and internal mobility in the period All explanatory variables including over are taken in their 1994 values. The results of some probit equations on job mobility are found in Table 7. The results show that over neither has a statistical significant effect on external mobility, nor on internal mobility. We also estimated some specifications including the length of time workers have been overeducated. This variable is zero for workers who are not overeducated. For workers who are overeducated it represents the length of time in their current job. It might be expected that a longer spell of over reduces the likelihood of obtaining another job, as longer spells of over serve as a signal of below average capabilities. As is shown in Table 7, the length of the spell of over does not have a statistically significant effect on job mobility.

14 13 4 Conclusion In this paper we have looked at the dynamics of over. Three conclusions emerge from the analyses. First, the dynamics in over is high. Over a two-year period, the outflow rate out of over is about 40%, while the inflow rate is about 5%. Only 4% of the workers in the sample are classified as long-term of persistently overeducated. It appears that job-tojob mobility provides a way out of over. Young workers are more likely to escape from over than older workers. We also find that job mobility reduces the probability of persistent or long-term over. Internal mobility does not seem to provide an escape from over. However, we do find that the probability of being overeducated decreased with tenure at the current firm. So, although changing jobs with the current employer has no statistically significant effect on over, the length of tenure has. A possible explanation for this seemingly contradictory - finding is that workers perceive the match between their work and their more positively the longer they are with their current employer and the longer the time since they left school. Secondly, we find evidence to support the hypothesis that over is a compensation for lack of other productive skills. Contrary to some other studies, we find no gender differences in over. We do however find a strong effect of hours of work. Part-time workers are more likely to be overeducated than full-time workers. And as more than two third of all parttime workers are women, the gender difference found in earlier studies may simply be an artifact for hours of work. The negative effect of hours of work on the probability of being overeducated suggests that over compensates for lack of (full-time equivalent) work experience and the lower productivity and

15 14 higher employment costs of part-time workers. A third conclusion we draw is that overeducated workers are almost three times as likely to search for work than workers who are not overeducated. Nearly 20% of the workers who are overeducated say they are actively searching for other work. This active search behavior of overeducated workers does not appear to have a positive effect on their probability of job mobility. We find that over does not have a statistically significant effect on internal or external mobility. So, although over increases the likelihood of searching for other work, it does not improve the chance of actually finding another job. This may suggest that overeducated workers are perceived as less capable by other employers. Whether over is a cause for concern depends on whether for individual workers over is a persistent phenomenon or rather a temporary state of affairs. The results in this paper clearly suggest that for many workers over is a temporary rather than a permanent phenomenon. Even if over is part of an adjustment period in the labor market and disappears with years of experience, over may be a permanent feature in western economies and create an inefficiency. Some workers experience an employment spell in which they bring more to their job than they at least initially require for their work. This raises the issue of the optimal timing of al investments. By the time the skills which initially are underutilized can be made productive, they may have become obsolete. Or these skills have been forgotten. When there are opportunities for lifelong learning, it may be argued that it is more efficient to train workers just in time. Further, there is also the issue of the financing of these al investments. Skills learned at school are usually (at least

16 15 partly) publicly financed. If these skills are learned later on at the work place, employers may pay part of the costs of these investments. If so, over is in part a public subsidy for skill investments which would otherwise have been paid by firms. However, we have also found evidence for the hypothesis that over compensates for lack of other productive skills, like experience. Rather than an inefficiency, over may even create a social benefit. If without this surplus workers find it more difficult to find employment at all and are more likely to be unemployed, over may lead to savings in unemployment benefits and active labor market policies aimed at the insertion of workers in the labor market.

17 16 References Agresti, A. & J. Lang (1993), A proportional odds model with subject-specific effects for repeated ordered categorical responses, Biometrika 80, p Büchel, F. & A. Mertens (2003), Over, under, and the theory of career mobility, Applied Economics, forthcoming Dekker, R., A. de Grip & H. Heijke (2002), The effects of training and over on career mobility in a segmented labour market, International Journal of Manpower 23, p Dolton, P. & A. Vignoles (2000), the incidence and effects of over in the U.K graduate labour market, Economics of Education Review 19, p Groot, W. (1993), Over and the returns to enterprise-related training, Economics of Education Review 12, p Groot, W. (1996), The incidence of, and returns to over in the UK, Applied Economics 28, p Groot, W. & H. Maassen van den Brink (1996), Overscholing en verdringing op de arbeidsmarkt, Economisch Statistische Berichten 4042, p Groot, W. & H. Maassen van den Brink (1997), Allocation and the returns to over in the United Kingdom, Education Economics 5, p Groot, W. & H. Maassen van den Brink (2000), Over in the labor market: a meta-analysis, Economics of Education Review 19, p Hedeker, D. & R. Gibbons (1994), A random-effects ordinal regression model for multilevel analysis, Biometrics 50, p Hedeker, D. & R. Gibbons (1996), MIXOR: a computer program for mixedeffects ordinal regression analysis, Computer Methods and Programs in Biomedicine 49, p Robst, J. (1995), Career mobility, job match and over, Eastern Economic Journal 21, p

18 17 Sicherman, N. (1991), Over" in the labour market, Journal of Labour Economics 9, p

19 18 Table 1 Cross tabulation of over in 1994 and over in 1996 Not overeducated Overeducated in Total in Not overeducated 85.1% 5.0% 90.1% in 1994 Overeducated in 5.9% 4.1% 9.9% 1994 Total 90.9% 9.1% 100.0%

20 19 Table 2 Parameter estimates (random) effects probit equation on the incidence of over I II III IV Intercept (0.244) (0.370) (0.370) (0.384) Highest level (reference category: lower vocational ) Primary * (0.116) (0.186) * (0.180) (0.188) Lower secondary (0.100) (0.161) (0.159) (0.164) Intermediate secondary 0.439** 0.527* 0.646** 0.486* (0.166) (0.247) (0.240) (0.256) Higher secondary 0.739** 1.045** 1.053** 1.035** (0.149) (0.262) (0.286) (0.268) Intermediate vocational 0.393** 0.492** 0.556** 0.494** (0.089) (0.142) (0.140) (0.143) Higher vocational 0.711** 0.883** 0.997** 0.874** (0.113) (0.180) (0.196) (0.183) University 1.021** (0.164) 1.282** (0.254) 1.257** (0.295) 1.271** (0.262) Other individual characteristics Male (0.077) (0.124) (0.128) (0.127) Married ** (0.075) * (0.120) (0.121) * (0.121) Hours of work ** (0.004) ** (0.006) ** (0.006) ** (0.006) Age (0.004) (0.006) (0.006) (0.006) Tenure * (0.005) * (0.008) ** (0.017) * (0.008) Year (0.140) (0.205) (0.205) (0.207) Job related characteristics No induction training (0.115) (0.169) (0.169) (0.171) One day induction 0.361** 0.429** 0.430** 0.413** training (0.098) (0.150) (0.150) (0.153) Does not supervise others (0.073) (0.109) (0.115) (0.111) Received firm-related

21 training (0.011) (0.018) (0.020) (0.018) Job level ** (0.039) ** (0.057) ** (0.111) ** (0.060) Firm related characteristics (reference category: public services) Metal and chemical industry (0.121) (0.190) (0.193) (0.193) Other industry (0.169) (0.239) (0.238) (0.242) Construction (0.176) (0.249) (0.253) (0.253) Trade (0.142) (0.206) (0.202) (0.208) Transportation (0.133) (0.186) (0.191) (0.189) Banking (0.178) (0.244) (0.247) (0.247) Commercial services (0.139) (0.196) (0.200) (0.198) Firm size/ (0.005) (0.007) * (0.007) (0.007) Mobility Job to job mobility (0.115) (0.158) (0.167) (0.329) Internal mobility (0.085) (0.134) (0.138) (0.264) σintercept 1.078** (0.108) 0.599** (0.263) σtenure 0.048** (0.015) σjob level 0.310** (0.080) ** (0.118) σjob to job mobility (1.128) σinternal mobility (0.620) Loglikelihood Intertemporal correlation coefficient * significant at 5% level; ** significant at 1% level.

22 21 Table 3 Parameter estimates fixed effects probit equations on entry in and exit from over (standard errors in brackets) From: not overeducated in From: overeducated in To: overeducated in 1996 To: not overeducated in 1996 Intercept ** (0.108) (0.182) Received firm-related (0.120) (0.208) training Job to job mobility (0.181) 0.964** (0.327) Internal mobility (0.148) (0.296) Loglikelihood LRT zero slopes

23 22 Table 4 Parameter estimates fixed effects probit equations on entry in and exit from over (standard errors in brackets) From : not overeducated in 1994 To: overeducated in 1996 From: overeducated in 1994 To: not overeducated in 1996 Intercept (0.409) (0.774) Highest level (reference category: lower vocational ) Primary (0.190) (0.518) Lower secondary (0.174) (0.348) Intermediate secondary (0.347) ** (0.671) Higher secondary 0.959** (0.256) (0.666) Intermediate vocational 0.448** (0.166) * (0.316) Higher vocational 0.442* (0.231) ** (0.447) University 0.865** (0.311) * (0.585) Other individual characteristics Male (0.149) (0.276) Married (0.140) (0.269) Hours of work ** (0.007) (0.012) Age (0.007) * (0.015) Tenure * (0.009) (0.020) Job related characteristics No induction training (0.238) (0.427) One day induction (0.218) (0.306) training Does not supervise others (0.131) (0.290) Received firm-related (0.018) (0.052) training Job level ** (0.078) 0.340* (0.165) Firm related characteristics Firm size/ (0.007) (0.049) Mobility Job to job mobility (0.146) 0.736** (0.294) Internal mobility 0.312* (0.160) (0.398) Loglikelihood

24 23 * significant at 5% level; ** significant at 1% level.

25 24 Table 5 Parameter estimates multinomial logit equations on the persistence of over (standard errors in brackets) Overeducated in 1994 or Overeducated in 1994 in 1996 and in 1996 Intercept (0.582) (0.943) Highest level (reference category: lower vocational ) Primary (0.307) (0.688) Lower secondary (0.260) 1.070* (0.445) Intermediate secondary (0.626) 2.541** (0.561) Higher secondary 1.851** (0.363) (1.89) Intermediate vocational 0.701** (0.237) 1.788** (0.425) Higher vocational 1.080** (0.323) 3.106** (0.531) University 1.922** (0.435) 3.793** (0.713) Other individual characteristics Male (0.211) (0.341) Married (0.207) * (0.320) Hours of work ** (0.010) * (0.015) Age (0.010) (0.016) Tenure (0.014) (0.024) Job related characteristics No induction training 0.786* (0.331) 1.052* (0.498) One day induction 0.996** (0.271) 1.512** (0.369) training Does not supervise (0.195) (0.354) others Received firm-related (0.029) (0.053) training Job level ** (0.114) ** (0.184) Firm related characteristics Firm size/ (0.014) * (0.056) Mobility Job to job mobility (0.209) * (0.362) Internal mobility (0.249) (0.443) Observed frequency

26 25 Loglikelihood * significant at 5% level; ** significant at 1% level. Table 6 cross tabulation of overducation and job search, 1994 and 1996 Not overeducated Overeducated Total Not actively 83.7% 8.0% 91.8% searching for another job Actively searching 6.3% 1.9% 8.2% for another job Total 90.0% 10.0% 100%

27 26. Table 7 Parameter estimates probit equations on the incidence of job-tojob and internal mobility (standard errors in brackets) Job to job mobility Internal mobility Intercept (0.330) (0.325) ** (0.316) ** (0.317) Highest level (reference category: lower vocational ) Primary (0.163) (0.163) (0.156) (0.156) Lower secondary (0.144) (0.144) (0.126) (0.126) Intermediate secondary (0.224) (0.223) (0.190) (0.190) Higher secondary (0.264) (0.263) (0.202) (0.202) Intermediate vocational (0.127) (0.126) (0.122) (0.123) Higher vocational (0.185) (0.184) (0.153) (0.154) University (0.256) (0.254) (0.215) (0.216) Other individual characteristics Male (0.111) (0.111) (0.104) (0.104) Married (0.109) (0.109) 0.269* (0.114) 0.274* (0.115) Hours of work (0.006) (0.006) (0.005) (0.005) Age ** (0.006) ** 0.006) (0.005) (0.005) Tenure ** (0.009) ** 0.009) (0.006) (0.006) Job related characteristics No induction training (0.218) (0.108) (0.255) (0.256) One day induction training (0.167) (0.218) (0.198) (0.200) Does not supervise others (0.108) (0.166) (0.092) (0.092) Received firm-related ** 0.043** training (0.020) (0.020) (0.013) (0.013)

28 27 Job level (0.062) Firm related characteristics Firm size/ (0.006) Over Overeducated in (0.143) Duration of over in (0.061) (0.006) (0.193) (0.003) (0.056) (0.005) (0.134) (0.056) (0.005) (0.182) (0.003) Loglikelihood * significant at 5% level; ** significant at 1% level.

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