Overeducation and human capital endowments

Abstract

Tests the hypothesis that overeducation is contingent upon the differing human capital endowments of employees. The analyses are based on data from the German Life History Study (GLHS). Applies a trivariate probit model which takes into account the selective acquisition of school qualifications, and the selective choice of vocational training programs with varying levels of quality. The findings confirm that the type of school diploma obtained has a strong effect on the later risk of overeducation. Furthermore, in the case of the intermediate school diploma – the qualification typically held by those entering initial vocational training in Germany – the grade attained also proves to have a strong effect on the risk of overeducation. In line with the existing literature, this paper finds that the risk of overeducation decreases as traditional human capital endowments such as experience, tenure, and on‐the‐job‐training increase.