Overeducation Dynamics in Germany and the United Kingdom: Risk Persistence of the Phenomenon and (Gender) Wage (Gap) Prospects

This study delves into the complex phenomenon of overeducation in the context of the German and United Kingdom labor markets, adopting a longitudinal perspective. Most contributions on the risk of experiencing overeducation (and on its consequences) employ a cross-sectional approach, often neglecting the micro-level persistence of the phenomenon. Consistently with the latter aspect, a number of empirical contributions depict overeducation as a persistent phenomenon, rather than a temporary one. Therefore, first of all, the study investigates overeducation persistence and its possible heterogeneity across groups (i.e., distinguishing primarily between female and male workers), in a comparative framework. The two countries chosen for the study represent two different ideal-typical institutional configurations, but, according to existing literature, both of them have experienced an increased wage inequality recently. Research on the scarring effects of overeducation has shown a strong lock-in effect, especially in a highly educationally stratified context, such as the German one, as well as reduced earnings and wage trajectories. Then, the study addresses the potential role of overeducation persistence in contributing to the gender wage gap, and it investigates the extent to which processes of state dependence and/or mechanisms of accumulation of (dis)advantage over time are involved. In particular, it is expected that not just overeducation risk but overeducation dynamics vary by the gender of the workers, with female workers facing increased penalties, thereby contributing to the gender wage gap. The study draws on panel data from country-specific longitudinal household studies, namely SOEP for Germany, and BHPS and UKHLS for the United Kingdom. For the analysis, dynamic random-effect probit models and the Oaxaca-Blinder Decomposition are performed. The study aims at contributing to research on stratification and on the longitudinal accumulation of inequality through a better understanding of both overeducation dynamics and gender wage gap, and their relation.