This study uses data from the Labour Supply Panel (‘Arbeidsaanbodpanel’) to analyse the incidence of overeducation in the Netherlands and the returns to overeducation compared to non-overeducated...Show moreThis study uses data from the Labour Supply Panel (‘Arbeidsaanbodpanel’) to analyse the incidence of overeducation in the Netherlands and the returns to overeducation compared to non-overeducated workers in the same job level, as well as the costs to overeducation compared to non-educated workers in the same education level. Our exploratory analysis combines descriptive statistics and linear probability models to illustrate the incidence of overeducation and to assess whether recent job polarization trends have led overeducation to be more prevalent among middle skilled workers, and whether economic downturns lead to an increase of overeducated workers. We find no evidence for such trends. Our regression models on the effects of overeducation on earned income are consistent with previous studies in that there are returns to overeducation compared to non-overeducated workers in the same job level. However, we find large disparities in returns over different education levels and job sectors, with many showing no significant returns whatsoever. Costs to overeducation compared to non-overeducated workers of the same education level are more pervasive, and are especially high among those groups that show no significant returns compared to non-overeducated workers within the same job level. Furthermore, our fixedeffects models illustrate that any such returns might be the result of unobserved individual characteristics, rather than of an individual’s formal education level.Show less
