Can entrepreneurship channel overqualification in young university graduates in the European Union?

Abstract

Human Capital Theory states that the higher a person's educational level, the higher their productivity and earnings. However, young university graduates sometimes find it difficult to enter the labor market due to their overqualification. The increase of qualified workers entails a decrease in their salaries when employed by others. One solution to the personal and economic costs of overqualification may be the creation of self-employment through entrepreneurship. For this reason, the EU 2020 strategy includes entrepreneurship principles in all educational levels to improve employability. This research focuses on the European population of under-25-year-olds with tertiary studies between 2009 and 2014. FsQCA is used to analyze the relationships among early entrepreneurship rates (GEM), expenditure on tertiary education (Eurostat), and overqualification levels (OECD) by country. Our findings show that there is a relationship between qualified entrepreneurial activity and young people, but none between educational investment and the entrepreneurial activity of young people.