Over-education of youth in Brazil and intrafamily labor supply decisions

Abstract

The mismatch between a worker’s level of education and the educational level required by their occupation, known as “educational mismatch”, is a growing problem in developing countries such as Brazil. Overeducated workers exhibit lower productivity, lower levels of job satisfaction, and wage penalties. Young and newly graduated individuals are particularly prone to overeducation, which often proves to be a career trap, becoming a persistent situation. Available studies on the subject traditionally adopt unitary models for labor market choices. However, these choices are made in a household context, taking into account the labor market placement of other household members. Thus, this article investigates educational mismatch in the Brazilian labor market for young people aged 18 to 29 in the role of children. A binomial logit model is applied to Continuous PNAD microdata from 2012 to 2019, adding a household approach to the labor supply of the youth. A negative effect on the probability of overeducation among the youth is associated with parental income, while the presence of overeducated parents is linked to higher probabilities of overeducation among the youth. Marginal effects of demographic variables are highlighted: young women present a lower probability of overeducation, while youth domiciled in rural areas or working in the agricultural or industrial sectors are associated with higher probabilities.