Underqualification as an Opportunity for Low-Educated Workers

Improving the labor market position of low-educated workers is one of the most important goals of regional labor market policy. Underqualification, meaning holding a job at a higher level than expected based on one's formal education, can be—under certain conditions—a favorable position from both an individual and a policy perspective. In this study we used repeated cross-sections of data about Dutch workers from 1996 to 2006 to relate the chances of underqualification to personal, firm, and labor market characteristics. Briefly, we found that, for low-educated workers, firm and personal characteristics are more important than regional characteristics in explaining underqualification. Higher regional unemployment rates lower the chances of being underqualified. Working in smaller firms or firms with many high-skilled jobs has a strong positive effect on the chances of attaining higher level jobs, while working in firms with many highly educated workers lowers these chances. Women and nonnatives are less often underqualified, whereas older workers are more often underqualified. Gaining more insight into the determinants of underqualification is important for developing more effective policy measures that aim to improve the labor market position of the most vulnerable groups in the labor market.