Education, Overeducation, and Youth Employment in the United States and Germany: The Mechanics of Restructuring

Recent analyses of the consequences of the economic restructur-ing of the1980s in the United States and Germany have paid little attention to the integration of young people into the labor force. However, it is at this point that private and public institutional actors have the greatest flexibility in allocating labor in a manner that fits with the requirements of a rapidly changing economy. This paper uses data from two nationally representative data sets, the U.S. High School and Beyond longitudinal study and the German Socio-economic Panel, to examine labor force integration processes in the two countries. The analysis focuses on 22-year-olds in each country and examines educational status, attainment, employment, and the incidence of overemployment (i.e., the extent to which skills obtained are required in subsequent employment). Special attention is paid to the distribution of young workers to labor market positions as defined by sector and skill levels. Effects of individual characteristics, labor market postion, and overeducation on earnings are estimated and compared between the two countries.