Educational mismatch in Europe: incidence, determinants and the impact of increased remote working

Overeducation (undereducation) refers to a situation where an employee’s educational attainment is higher (lower) than the level
required to do their job. We show that both overeducation and undereducation in the EU declined over time from 2014 to 2021.
Using a machine learning algorithm, we find that educational attainment, occupation and job tenure are important predictors
of both types of mismatch. While a large proportion of the decline in undereducation can be attributed to increasing educational
attainment, the decline in overeducation cannot be explained by changes to these characteristics. To investigate this further, we
utilise unique data from the European Skills and Jobs Survey which asks employees whether they experienced greater capacity
to work remotely following the onset of the COVID-19 pandemic. Using a matching estimator, we show that European employees
that benefitted from greater capacity to work remotely are ten percentage points less likely to be overeducated than similar
employees who did not experience increased remote-working flexibility. This suggests that remote work may provide employees with
greater flexibility to find matched jobs, which could reduce overeducation rates.