Overeducation, persistence and unemployment in Spanish labour market

Abstract

<jats:sec><jats:title content-type="abstract-subheading">Purpose</jats:title><jats:p>The phenomenon of overeducation and the magnitude and persistence of the imbalance impact are analysed for the Spanish labour market from 2006 to 2013.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-subheading">Design/methodology/approach</jats:title><jats:p>The authors present random-effects probit estimations comparing individuals and their short-term and long-term labour mismatches.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-subheading">Findings</jats:title><jats:p>The results support the existence of long-term persistence (status in the previous year) and short-term persistence (status at the beginning of the observed period) in overeducation. Precariousness in the labour market, measured by temporality or by the strong destruction of employment, could force individuals to choose a job below their qualification. Additionally, the phenomenon of overeducation is shown to have increased in the period 2010–2013 in relation to the period 2006–2009 independently of the region considered, though those regions with higher unemployment rates display greater imbalances.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-subheading">Research limitations/implications</jats:title><jats:p>Although the results come from two different samples, it is possible to conclude that overeducation is a phenomenon that tends to perpetuate over time in Spain.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-subheading">Practical implications</jats:title><jats:p>One of the issues of greatest interest that is crucial to assess the relevance of the spreading of overeducation is whether overeducation can be considered as a temporal mismatch, in which case the seriousness of the problem would not be so important, or, on the contrary, as a persistent one, in which case, governments should take it into account in their education reform programmes.</jats:p></jats:sec><jats:sec><jats:title content-type="abstract-subheading">Originality/value</jats:title><jats:p>Overeducation persistence has been studied in countries such as the United States, Canada, Switzerland or Germany; however, in Spain, there are hardly any studies. Spanish labour market has certain specificities that make the analyses relevant: the high unemployment rates and high elasticity of employment with respect to the economic cycles. Under these circumstances, workers could opt for more stable positions that require a lower qualification than the one they have. This option could be even more convenient during crisis. Additionally, the article includes a disaggregated analysis by Spanish regions. The differences in the unemployment rates within and between regions are significant (some of them had at the beginning of the crisis an unemployment rate close to 7%, while in others it exceeded 12%) which allows the authors to study the phenomenon in different contexts.</jats:p></jats:sec>

Underemployment due to overeducation: An analysis of worker cooperatives versus conventional firms

“…In turn, worker dissatisfaction can affect companies as overeducation can lead to poor performance and decreased productivity (McCormick, 1990; Tsang, 1987). Collectively speaking, underemployment limits a region or country’s potential for growth (Ueno and Krause, 2018) as public resources allocated to higher education are not optimised and fail to result in improved individual and collective wellbeing (Sánchez-Sánchez and Fernández-Puente, 2021).…”

“…In the specific case of Spain, as in other European countries, the university-educated population has grown considerably in recent decades. According to OECD data, the proportion of people aged 25–64 years with higher education rose from 28% in 2006 – a few years before the economic crisis – to around 34% in 2013 (Sánchez-Sánchez and Fernández-Puente, 2021). However, this rise in highly educated people has outpaced demand for the type of work requiring these education levels, leading to more widespread overeducation than in other advanced economies (Capsada-Munsech, 2020; García-Montalvo, 2009; Sánchez-Sánchez and Fernández-Puente, 2021).…”

“…According to OECD data, the proportion of people aged 25–64 years with higher education rose from 28% in 2006 – a few years before the economic crisis – to around 34% in 2013 (Sánchez-Sánchez and Fernández-Puente, 2021). However, this rise in highly educated people has outpaced demand for the type of work requiring these education levels, leading to more widespread overeducation than in other advanced economies (Capsada-Munsech, 2020; García-Montalvo, 2009; Sánchez-Sánchez and Fernández-Puente, 2021). Overeducation is a structural phenomenon that is sustained over time, regardless of the current phase of the economic cycle (Sánchez-Sánchez and Fernández-Puente, 2021).…”

“…However, this rise in highly educated people has outpaced demand for the type of work requiring these education levels, leading to more widespread overeducation than in other advanced economies (Capsada-Munsech, 2020; García-Montalvo, 2009; Sánchez-Sánchez and Fernández-Puente, 2021). Overeducation is a structural phenomenon that is sustained over time, regardless of the current phase of the economic cycle (Sánchez-Sánchez and Fernández-Puente, 2021). Although some authors view overeducation as temporary (Alba-Ramírez, 1993; Iriondo and Velázquez, 2014), Barone and Ortiz (2011) observe that, unlike other European countries, overeducation in Spain is a mass phenomenon rather than a temporary one, making it a serious issue.…”

“…In Spain, international institutions such as the Organisation for Economic Co-operation and Development (OECD) have warned of high levels of overeducation, which vastly exceed those of other developed economies (García-Montalvo, 2009). Underemployment due to overeducation not only affects individuals, it also has a series of negative impacts on society as a whole, such as a failure to obtain the desired results from the resources allocated to education (Sánchez-Sánchez and Fernández-Puente, 2021) and underuse of human capital limiting opportunities for economic growth (Ueno and Krause, 2018).…”