Educational qualifications mismatch in Europe: is it demand or supply driven?

Most papers dealing with individual overeducation risks focus on labour supply characteristics and workers' behaviour. On the other hand, only a few studies consider labour demand characteristics and technological change. In this paper we analyse the influence of both demand and supply factors on educational mismatch in a set of 10 European countries. Our hypothesis, confirmed by results obtained using ordered probit model with sample selection, is that demand factors generally play a major role in reducing educational mismatch in technologically more advanced countries, whereas supply factors are more important in countries that are lagging behind in the international division of labour. At the same time, important cross-country and gender differences have been identified in the way the demand/supply factors operate. All this calls for the fine-tuning of policies aimed to tackle the problem of educational mismatch. Apparently, [employment protection legislation] EPL does not appear neither to hinder technological development, nor increase overeducation.

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