Immigrant Overeducation: Evidence from Denmark

by Chantal Pohl Nielsen 

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Many Danes can tell a story of how they realised that an immigrant taxi driver they met was in fact an engineer who gave up trying to find a job appropriate for his education. Using a 1995-2002 panel data set based on Danish registers, this study investigates the empirical basis for anecdotes such as this. Three questions are posed: First, to what extent are immigrants overeducated and are they more likely to be so than native Danes? Second, why are some immigrants more likely to become overeducated than others? And finally, what are the consequences of overeducation for individual wages? We find that among wage earners with at least a vocational education or higher, 25% of male non-Western immigrants are overeducated. The same applies for 15% of native Danes. Particularly immigrants with a foreign-acquired education risk becoming overeducated – here the share is 30% among those with a vocational education or higher. We find that Danish labour market experience is extremely important in reducing the likelihood of becoming overeducated. Years spent in the country without accumulating labour market experience do not improve an individual’s chances of an appropriate job-to-education match. In terms of earnings consequences, the study concludes that years of overeducation do increase wages for immigrants, but much less so than years of adequate education. This is also true for native Danes, but the relative penalty for overeducation is much larger for immigrants than for Danes.

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