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.