Over-education among immigrants: the role of demographics, time, and firm characteristics

This paper puts the nexus between immigration and over-education to an updated test, capitalizing on the authors’ access to rich Belgian matched employer-employee data for the period 1999–2010. These data enable the authors to i) measure over-education with higher precision, ii) examine the heterogeneous effects of workers’ birth countries, and iii) test the role of key moderators. Using ordered probit estimates, the authors highlight that workers born in developing countries (especially in Asia and North Africa) are much more likely to be over-educated than their opposite numbers born in developed countries. However, the results also show that this gap in over-education is entirely driven by tertiary-educated workers. Gender-based differences in immigrants’ penalties, in contrast, are found to be quite modest overall. In line with statistical discrimination, results further show that tenure has a moderating effect on the likelihood for immigrants born in developing countries to be over-educated and that citizenship acquisition is also associated with improved job matches for those immigrants. Finally, regarding the role of firm characteristics, the authors find that the likelihood for immigrants from developing countries to be over-educated is significantly smaller in bigger firms and when working conditions are collectively renegotiated at the firm level.