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This paper aims to survey the theoretical and empirical literature on cross-country differences in overeducation. While technological change and globalization have entailed a skill-bias in the evolution of labour demand in the Anglo-Saxon countries, instead, in other advanced economies in Western Europe the increased educational level has not been associated with a parallel raise in the share of skilled occupations, therefore generating skills mismatch. This suggests that a demand-side explanation of overeducation is justified in Western Europe, which would be also confirmed by circumstantial evidence coming from the recent literature. Nonetheless, overeducation may also turn to be positive in the long run if the expansion of the supply of skills generates a technological upgrading of the production system. Moreover, from a micro-economic point of view, recent theoretical and empirical studies tend to justify a human capital theory based interpretation of the phenomenon, whereas the disorganization of the educational system, its degree of integration with the labour market may play an important role in helping young graduates develop the work experience and the competences they need to prevent them from experiencing overeducation. Overeducation causes a penalty to individuals in terms of earnings and employment opportunities and a waste of resources to the society at large in terms of state investment into education that do not bear its yields. Both penalties are higher not only where the demand for skill is lower, but also where school-to-work transition systems fail to effectively address the aim of generating competences rather than only education for their graduates.

The Italian economy performs well below the EU average. The reason is a dramatic and persistent low rate of investment, always invoked but never supported by national and supra-national institutions. However, investment to increase the quantity and quality of human capital is key to boost economic growth and cannot be achieved without adequate financial resources. At the same time, the educational system needs to relaunch university reforms (including the Gelmini and 3+2 reforms) which have been unsuccessful so far because they were poorly implemented. Last but not least, more and better ties between the educational system and the labor market should be developed as soon as possible.

This essay delivers two main innovations with respect to the existing literature. First, and foremost, by extending the work of Nicaise (2010) relative to the reservation wage to the case of overeducation, we propose a statistical test to discriminate between alternative theoretical interpretations of the determinants of overeducation through the Heckman sample selection procedure. Second, the essay provides the first available economic analysis of the consequences of the educational mismatch in Italy as based on AlmaLaurea data, the largest and richest data bank available in the country. The data includes a large number of university graduates enrolled in a given year before the Bologna reform and asks a large number of questions allowing us measuring among others the quality of education from high school. This wealth of information is a condition to provide the most comprehensive, accurate and reliable assessment of overeducation in the country. The educational mismatch 5 years from graduation is relatively high – at 11.4% and 8% for overeducation and overskilling, respectively – by EU standards. Ceteris paribus the parents of the mismatched have lower educational levels according to school tracking. Most humanities and social sciences degrees but also geology, biology and psychology are associated with both types of mismatch. The quality of education also correlates to the educational mismatch. We find a nonconditional wage penalty associated to overeducation and overskilling of 20% and 16% and a conditional one of about 12% and 7%, respectively. The Heckman sample selection model returns a slightly higher sample selection corrected wage penalty, supporting not only the job competition and job assignment models, but also the human capital model. Other concurrent statistical tests point to the difficulty that the educational system faces in providing work-related skills to graduates.

This chapter discusses the factors determining overeducation by reviewing the main empirical and theoretical literature, and deals with the specific case of Italy. It discusses the role of the evolution of the aggregate supply of and demand for skills over time and across countries and regions. Cross-country analyses attempt to capture the role of the demand for skills by looking at the different characteristics of the production structure of different countries. In Italy, overskilling equals 21 per cent at the first job and 11 per cent five years after graduation. Italy is still under Spain and the UK only, but this time also other countries have similar levels, fluctuating from 8 per cent in Portugal and Norway to 19 per cent in Belgium and 21 per cent in France. The literature on the role of demand-side factors is still tentative, since most of it is based on a microeconomic approach and on individual-level data.

This paper aims to survey the theoretical and empirical literature on cross-country differences in overeducation. While technological change and globalization have entailed a skill-bias in the evolution of labour demand in the Anglo-Saxon countries, instead, in other advanced economies in Western Europe the increased educational level has not been associated with a parallel raise in the share of skilled occupations, therefore generating skills mismatch. This suggests that a demand-side explanation of overeducation is justified in Western Europe, which would be also confirmed by circumstantial evidence coming from the recent literature. Nonetheless, overeducation may also turn to be positive in the long run if the expansion of the supply of skills generates a technological upgrading of the production system. Moreover, from a micro-economic point of view, recent theoretical and empirical studies tend to justify a human capital theory based interpretation of the phenomenon, whereas the disorganization of the educational system, its degree of integration with the labour market may play an important role in helping young graduates develop the work experience and the competences they need to prevent them from experiencing overeducation. Overeducation causes a penalty to individuals in terms of earnings and employment opportunities and a waste of resources to the society at large in terms of state investment into education that do not bear its yields. Both penalties are higher not only where the demand for skill is lower, but also where school-to-work transition systems fail to effectively address the aim of generating competences rather than only education for their graduates.

In this paper we explore recent ISFOL-PLUS 2006-2008-2010 data available for Italy about height and weight of young workers with the purpose of analysing the relationship between measures of obesity and measures of economic performance. Among the latter, we introduce job satisfaction, both overall and for nine specific aspects, which has not been previously considered in the literature on the effects of obesity. Interestingly enough, we find that BMI does not discriminate young workers with respect to their job earnings, but it does affect negatively young workers' job satisfaction with important gender effects.

This paper provides the first available evidence on overeducation/overskilling based on AlmaLaurea data. We focus on jobs held 5 years after graduation by pre-reform graduates in 2005. Overeducation/overskilling are relatively high – at 11.4 and 8% – when compared to EU economies. Ceteris paribus they tend to be more frequent among children of parents with lower educational levels, through school tracking. Most arts degrees and social sciences, but also Geology and Biology are associated to both types of the educational mismatch. The quality of education is also a factor, suggesting that in addition to the low demand for skills, one should also reckon the inability of the educational system to provide work-related skills. Moreover, we find a non-conditional wage penalty of 20% and 16% and a conditional one of about 12% and of 7%, respectively. Heckit returns a sample selection corrected penalty slightly higher, supporting not only the job competition and job assignment models, but also the human capital model.

The Italian process of flexibilization of the labour market has created a dual market populated by protected permanent employees and unprotected temporary workers. The latter comprises not only temporary employment relationships but also autonomous collaborations used by firms as low-cost de facto temporary employment relationships. Little is known about the quality of these temporary jobs, particularly widespread among young workers. We estimate a regression model of perceived overall job satisfaction of young workers, based on the ISFOL-PLUS 2006-2008-2010 panel. We control for the various temporary contracts and for perceived satisfactions in nine aspects of the job. We find that lack of job stability is the most serious cause of lower satisfaction for both temporary employees and autonomous collaborators. But while temporary employees compensate concerns of job stability with other job aspects, attaining satisfaction levels comparable to those of permanent employees, autonomous collaborators do not and are thus significantly the least satisfied.

In this paper we study labor market transitions out of temporary jobs in Italy focussing on an interesting period of the Italian recent history: the one immediately following the last labor market reform aimed at flexibilizing and liberalizing the Italian labor market by a widespread use of temporary work arrangements in 2003, and immediately preceding the economic downturn starting in the second half of 2007. The data-set used is the 2004-2007 IT-SILC individual panel. We apply a discrete-time duration analysis and estimate a competing-risk model for assessing to which extent, and for whom, starting a temporary job after 2004 results within a 3-years span in a stepping stone to permanent employment rather than a dead end out of the labor market or in precarious jobs. We find that temporary contracts have a positive impact only on men's transitions to permanent employment. School leavers, workers in the South, as well as women, are instead rather penalized after a temporary job. They have an higher probability to remain trapped in temporary contracts than men and an higher probability of exiting the labour market. In particular, school leavers entering the labour market with a temporary contract experience relatively high exit-rates to non-employment just after the first year of the contract.

Youth leaving school and searching for a job suffer of work experience gap. This is very similar to the skill mismatch that occurs after a shock of demand or supply of competencies: to adequate the supply of competences to the new needs, it is necessary to modify the education and training system which takes time and money. Young people face a similar problem during their school to work transition. In fact, despite ever increasing educational attainment, they lack the other two components of human capital: generic and job-specific work experience. In order to fill this experience gap, they carry out a searching strategy by which they move among different labour market statuses in search for the best job-worker match. However, the process of transition is a complex phenomenon with strong elements of rigidity, concerning the institutions (school, training and university systems and labour agencies) and the norms and contracts regulating the labour market, uncertainty and errors of judgment. Accordingly, the search strategy takes time and is costly. Lower quality Institutions and not flexible labour markets augment the risk that youth make a mistake in their searching investment, or send wrong signals to the firms, and consequently fall permanently into a chain of high and long term unemployment, low pay, temporary or part-time work or inactivity. A comparative analysis shows that the youth condition is not the same all over the OECD countries. To help young people smooth school-to-work transitions, every country has provided a mix of policy instruments reaching different outcomes. We can sum up these instruments into two groups: policies that, considering the need of firms to minimize the labour costs, aim at introducing different degrees and types of labour market flexibility, and policies that, considering the need of new entrants to adequate their human capital , adopt programs of training and labour market active policies or reforms of their education and training system. Broadly speaking, countries with flexible labour market and relatively less expenditures in training and active policies get both low and very high levels of youth unemployment. Nevertheless, Centre-North European countries get a relatively low unemployment rate with more welfare guarantees to youth and high expenditure in training and active policies. However, there is a general consensus both in criticizing the second type of policies, since these are too expensive for the public finances, and in preferring the liberalization of the labour market. This paper is meant to analyze the case of the young graduates and the probability to be overqualified or underskilled. It gives evidence that policies to cut down the labour costs and salaries are of little scope merely aiming at an immediate saving, on the other hand, they are damaging in the long term. Conversely, investments in human capital are very important to augment the productivity growth and reduce regional differences. University and school of low quality as well as lack of instruments aiming at strengthening the link between the education system and the work experience, make permanent the qualification and skill mismatch and hinder wages from restoring the equilibrium of the labour market. In the long term, the wage gap for overqualified and underskilled has consequences on productivity growth. Considerations are made also for the Mezzogiorno case.

In this paper we study labor market transitions out of temporary jobs in Italy focussing on an interesting period of the Italian recent history: the one immediately following the last labor market reform aimed at flexibilizing and liberalizing the Italian labor market by a widespread use of temporary work arrangements in 2003, and immediately preceding the economic downturn starting in the second half of 2007. The data-set used is the 2004-2007 IT-SILC individual panel. We apply a discrete-time duration analysis and estimate a competing-risk model for assessing to which extent, and for whom, starting a temporary job after 2004 results within a 3-years span in a stepping stone to permanent employment rather than a dead end out of the labor market or in precarious jobs. We find that temporary contracts have a positive impact only on men's transitions to permanent employment. School leavers, workers in the South, as well as women, are instead rather penalized after a temporary job. They have an higher probability to remain trapped in temporary contracts than men and an higher probability of exiting the labour market. In particular, school leavers entering the labour market with a temporary contract experience relatively high exit-rates to non-employment just after the first year of the contract.

Italy has an immobile social structure. At the heart of this immobility is the educational system, with its high direct, but especially indirect cost, due to the extremely long time necessary to get a degree and to complete the subsequent school-to-work transition. Such cost prevents the educational system from reallocating the best opportunities to all talented young people and from altering the typical market mechanism of intergenerational transfer of human capital and social status. About ten years after the Bologna declaration and the 3+2 reform of the university system, AlmaLaurea data relative to 2008 shows a framework not much different from that of 2000. This is apparent by looking at the socio-educational background of university graduates. Parents' educational level seems to be the main determinant of the probability to get a university degree and to get it with the highest possible grade. As previous studies have also shown, the effect of the socio-educational background on children success at the university is not direct, but through the high school track. In fact, although any secondary high school gives access to the university, nonetheless lyceums provide students with far higher quality of education than technical and professional schools.

This paper suggests that the insufficient work experience of young people as compared to adults is the major cause of the hardship the former experience in the labour market both in terms of employment and wages. Economists are bewildered as to the determinants of and as to the ways to cure the youth experience gap. Most of them believe that the market should solve youth hardship by offering them: a) a lower than average entry wage able to mirror their lower productivity level; b) increasing labour market flexibility so as to allow them to move more easily from one job the next until they have found the best one for them; c) and, in particular, temporary work, considered as the only way to allow them to acquire the work experience they actually need. Other observers, instead, criticize entry flexibility and temporary work. The former works only if accompanied by additional instruments, otherwise it favours only those people who already have a greater level of motivation and skill. Temporary work allows accumulating only generic, not job specific work experience. The solution is a policy mix whereas labour market flexibility is accompanied by a more efficient and even education and training system and on the duality principle. This is shown in the second part of the paper by building a classification of EU regimes by type of school-to-work transition institutions.