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Overeducation and Economic Growth: Theoretical Background and Empirical Findings for the Region of Central and Eastern Europe

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  • Mariya Neycheva
  • Ivan Neychev

Abstract

One of the issues which has gained considerable attention in the recent labour market literature is the increase of both average educational attainment of the population and qualification mismatch. With regard to that, this paper aims at examining the impact of overeducation on long-run economic growth. It discusses the main transmission channels and mechanisms of that impact. Moreover, by incorporating qualification (mis)match in the neoclassical model of growth with human capital the study presents an empirical estimation of the link between mismatch of tertiary education graduates and real GDP per capita growth across the EU members from Central and Eastern Europe. The results show that though investments in human capital accelerate the rate of growth, the higher percentage of mismatched graduates displays a negative effect. This outcome is robust to the changes of the approach used to measure overeducation and the method of estimation as well.

Suggested Citation

  • Mariya Neycheva & Ivan Neychev, 2020. "Overeducation and Economic Growth: Theoretical Background and Empirical Findings for the Region of Central and Eastern Europe," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 5, pages 124-142.
    • Handle: RePEc:bas:econst:y:2020:i:5:p:124-142
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical

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