Overeducation at the start of the career: Stepping stone or trap?

• We study whether overeducation speeds up or delays transition to an adequate job.
• The Timing of Events approach is adopted to account for selectivity.
• We find that overeducation at the start of the career is a trap.
• The entrapment effect is especially important early in the unemployment spell.
• Our results are robust across various specifications and 2 overeducation measures.

This study investigates whether young unemployed graduates who accept a job below their level of education accelerate or delay the transition into a job that matches their level of education. We adopt the Timing of Events approach to identify this dynamic treatment effect using monthly calendar data from a representative sample of Flemish (Belgian) youth who started searching for a job right after leaving formal education. We find that overeducation is a trap. By accepting a job for which one is overeducated rather than only accepting adequate job matches, monthly transition rates into adequate employment fall by 51–98%, depending on the elapsed unemployment duration. These findings challenge the career mobility thesis and imply that the short-term benefits of policies that generate quick transitions into employment must be traded-off against the long-term costs of an inadequate job match.