Felix Büchel

Overeducation, Undereducation, and the Theory of Career Mobility

The theory of career mobility (Sicherman and Galor, Journal of Political Economy, 98(1), 169–92, 1990) claims that wage penalties for overeducated workers are compensated by better promotion prospects. Sicherman (Journal of Labour Economics, 9(2), 101–22, 1991) was able to confirm this theory in an empirical study using panel data. However, the only retest using panel data so far (Robst, Eastern Economic Journal, 21, 539–50, 1995) produced rather ambiguous results. In the present paper, random effects models to analyse relative wage growth are estimated using data from the German Socio-Economic Panel. It is found that overeducated workers in Germany have markedly lower relative wage growth rates than adequately educated workers. The results cast serious doubt on whether the career mobility model is able to explain overeducation in Germany. The plausibility of the results is supported by the finding that overeducated workers have less access to formal and informal on-the-job training, which is usually found to be positively correlated with wage growth even when controlling for selectivity effects (Pischke, Journal of Population Economics, 14, 523–48, 2001).

Overeducation, Regional Labor Markets and Spatial Flexibility

For most workers, access to suitable employment is severely restricted by the fact that they look for jobs in the regional labour market rather than the global one. In this paper we analyse how macro-level opportunities (regional labour market characteristics) and microlevel restrictions (the extent to which job searchers are restricted to the regional labour market) can help to explain the phenomenon of overeducation. For the purposes of this project we obtained special permission to link regional data supplied by the German Federal Office for Building and Regional Planning to data provided by the respondents in the German Socio-Economic Panel (GSOEP), based on their region of residence. The use of multilevel models made it possible to combine both individual and regional characteristics in the same models. In addition, we used the Heckman two-step procedure to control for selective access to employment. The results show that the size of the labour market is an important factor in avoiding overeducation: looking for a job on a large labour market increases the probability of finding a suitable job. Access to a car for personal use and a longer commuting time reduce the risk of working in a job for which one is overeducated.

Premiums and penalties for surplus and deficit education: Evidence from the United States and Germany

Abstract An intriguing finding in the literature on the role of education in the labor market concerns workers who have acquired either more or less education than they say their jobs require. Contrary to predictions from a rigid, structural view of jobs, several authors have found that the labor market rewards workers for having completed more schooling than their jobs require and penalizes workers who have ‘too little’ schooling. We investigate whether the structural changes in the labor market in the United States over the 1970s and 1980s (see Levy, F., & Murnane, R. (1992). US earnings levels and earnings inequality: a review of recent trends and proposed explanations. Journal of Economic Literature, 30, 1333–1381) affected the rewards and penalties associated with having too much or too little schooling for a job. We then examine whether the same rewards and penalties for surplus and deficit education observed in the United States apply in Germany, a country with a much more structured educational system and labor market. We test explicitly for differences over time in the United States and at a point in time between the United States and Germany. We find, consistent with a universalistic view of labor markets, more similarities across countries than over time.

The Effect of Central Exit Examinations on Student Achievement: Quasi-experimental Evidence from TIMSS Germany

This paper makes use of the regional variation in schooling legislation within the German secondary education system to estimate the causal effect of central exit examinations on student performance. We propose a difference-in-differences framework that exploits the quasi-experimental nature of the German TIMSS middle-school sample. The estimates show that students in federal states with central exit examinations clearly outperform students in other federal states, but that only part of the difference can be attributed to central exit examinations. Our results suggest that central examinations increase student achievement by about one third school year equivalent.

Successful Apprenticeship-to-Work Transitions: On the Long-Term Change in Significance of the German School-Leaving Certificate

The quality of labor‐market entry achieved by newly qualified apprentices in West Germany from 1948 to 1992 is analyzed. A bivariate probit model, using data from the BIBB/IAB employment survey, is applied to estimate simultaneously the quality of the school‐to‐apprenticeship transition and that of the apprenticeship‐to‐work transition. This shows that school leavers with lower levels of general education are selected into apprenticeships with less favorable employment prospects in all analyzed time periods. However, when controlling for this selection effect, it is only in the most recent period that lower academic achievers are further penalized for the shortcomings in their general education at the apprenticeship‐to‐work transition. Furthermore, the crowding‐out of trainees with lower levels of general education can be observed in both the less demanding and the more challenging occupational fields.

Overeducation and human capital endowments

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.

Unemployment Benefits, Unemployment Duration and Subsequent Job Quality: Evidence from West Germany

The high unemployment figures in many European countries are often attributed to overgenerous unemployment benefits. However, proponents of benefit cuts tend not to recognize that unemployment benefits also facilitate longer job searches and, as a result, ultimately improve job matches. In this article, we investigate the effects of unemployment benefits on subsequent job quality by differentiating between transitions from unemployment to correctly allocated jobs and to over-education. Data are drawn from the West German Life History Study (GLHS). Results from Kaplan-Meier estimators and hazard regression models show that non-recipients of unemployment benefits indeed have a shorter unemployment duration, but that they also have significantly higher rates of transition to over-education than recipients of unemployment benefits. On the other hand, the receipt of unemployment benefits does not influence the transition to qualified jobs, which seems to be influenced more by labour demand. It is therefore important to bear in mind that reforming the unemployment compensation system by reducing unemployment benefits will not only shorten the average unemployment duration, but also increase the incidence of over-education and consequently reduce the overall job match quality in the labour market.

Public Transfers, Income Distribution, and Poverty in Germany and in the United States

In most industrialized countries one major task of the welfare system is to combat poverty. This includes a policy targeted at those who are in need permanently, as well as at those who face the risk of more or less severe income losses which might arise from specific life situations such as unemployment. In most cases this is accomplished by the payment of direct transfers or subsidies to the respective household and its members. This common baseline of perception about the general structure of a welfare system exists regardless of the fact that public transfers in Germany reach much more citizens than in the United States. This is true even for those families with income weil above a poverty line, for example well-earning households with children. It is common sense in both countries that the welfare system should not level income inequality caused by different individual behavior. Its purpose is rather to protect individuals from falling into poverty.

Arbeitslosigkeit, öffentliche Transferzahlungen und Armut — Eine Mikro-Simulation für West-und Ostdeutschland

Das System der sozialen Sicherung in Deutschland ist seit langem Gegenstand vielfaltiger Diskurse und Reformvorschlage. Zentrale Grundlage dieser Kontroversen sind „unterschiedliche Einschatzungen der auf lange Sicht zu erwartenden Entwicklung der demographischen, gesellschaftlichen, wirtschaftlichen und politischen Rahmenbedingungen“ sowie daran anknupfend gravierende Unterschiede in den „sozialpolitischen Werthaltungen“ und der politischen Bewertung der Rolle des Staates (Hauser, 1995: 51). Divergierende sozialpolitische Werthaltungen und unterschiedliche politische Bewertungen der Rolle des Staates manifestieren sich allem voran in dem Ausmas der Umverteilung, insbesondere der offentlichen Unterstutzung privater Haushalte bei unzureichender Einkommenslage und Armut.