Overeducation

Overeducation refers to a situation in which an individual's level of education exceeds the requirements of their job. It is a form of education mismatch, distinct from undereducation, where education is below job requirements, and from underutilization, where skills are not fully used even if the job matches the level of education. Overeducation is often measured by self-reports of mismatch or by comparing an worker’s attained degree with the typical education required for their occupation.

Causes of overeducation are varied. They include rapid expansion of higher education, credential inflation that raises the bar for entry into many jobs, and the signaling value of a degree beyond its direct job relevance. Labor market frictions, geographic or occupational immobility, and the lag between supply and demand for certain fields can also contribute. Economic cycles matter: in downturns, graduates may accept jobs that do not fully utilize their education, extending the occurrence of overeducation.

Impacts of overeducation can be mixed. It is often associated with lower earnings relative to peers in the same field who work in roles that require their education, higher unemployment risk for graduates, and possible underutilization of skills. Some individuals may experience greater long-term benefits if higher education enhances transferable skills, adaptability, or access to better opportunities later.

Debates surround whether overeducation reflects inefficiency in the labor market or broader changes in job design and skill needs. Policy responses focus on improving labor market information, aligning curricula with labor demand, expanding apprenticeships and alternative pathways, and promoting lifelong learning to better match skills with evolving job requirements. Examples of overeducation occur in some advanced economies where a substantial share of graduates work in occupations that typically require less education, such as certain administrative or clerical roles.