Is Employment Polarization Creating More Over-Educated Workers? Evidence from Germany, Spain, Sweden and UK

Abstract

This study explores if declining employment in routine middle-skilled jobs as a result of technological change is creating more over-educated workers in the low skilled non-routine manual jobs. Using data from European Labour Force Survey covering the period from 1999 to 2007, the paper analyses employment change and over-education in four countries of Europe – Germany, Spain, Sweden and UK. The results suggest higher incidence of over-education in polarized countries – Spain and UK as compared to countries with employment upgrading – Germany and Sweden. It also reveals that in Spain and UK, over-education is prominent and increasing over time in the low paid jobs which are mostly non-routine manual in nature, while Germany and Sweden have more over-educated workers in middle skilled routine and high skilled analytical jobs. I find similar results in both descriptive and job fixed effects regressions.