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Crowding Out in the Labour Market: Do Employers Lend a Hand?

Author

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  • Verhaest, Dieter

    (KU Leuven)

  • Bogaert, Elene

    (Ghent University)

  • Dereymaeker, Jeroen

    (KU Leuven)

  • Mestdagh, Laura

    (KU Leuven)

  • Baert, Stijn

    (Ghent University)

Abstract

We test the basic assumption underlying the job competition and crowding out hypothesis: that employers always prefer higher educated to lower educated individuals. To this end, we conduct a randomised field experiment in which duos of fictitious applications by bachelor and master graduates are sent to real vacancies requiring only a bachelor degree. Our design allows to look at whether employers' preferences for overqualified versus adequately qualified applicants depend on the demand and supply context, sectoral activity and type of organisation, and characteristics of the posted vacancy. For the overall sample, we find that master graduates are 19% more likely to be directly invited for a job interview. Nonetheless, we conclude that eventual crowding out of bachelor graduates as a consequence of this selection policy is unlikely to be large since the advantage for master graduates is particularly observed for jobs with high overall invitation rates.

Suggested Citation

  • Verhaest, Dieter & Bogaert, Elene & Dereymaeker, Jeroen & Mestdagh, Laura & Baert, Stijn, 2016. "Crowding Out in the Labour Market: Do Employers Lend a Hand?," IZA Discussion Papers 9654, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp9654
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    More about this item

    Keywords

    underemployment; mismatch; youth labour market; hiring; recruitment; job competition; overqualification; field experiments;
    All these keywords.

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions

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