Educational Mismatch and Unemployment Scarring

This work investigates educational mismatch and its interrelationships with unemployment duration. By studying unemployment histories of Italian workers we show that overeducated have longer unemployment spells than their well matched peers. This evidenceimplies that when assessing the impact of overeducation on wages, the duration of joblessness should be taken into account to evaluate possible additional unemployment scarringe¤ects. Using propensity score and treatment models, we show that when controlling for unemployment spell duration the wage effect of overeducation signi…cantly increases of about7%. This result is supported by improvements in the sensitivity analysis. Our fi…ndings areconsistent with an interpretation of educational mismatch as a penalizing phenomenon inthe individuals’ working life associated with long term unemployment.