Previous studies have shown that overeducation is inferior to adequate employment. For example, overeducated workers have lower earnings, participate less often in continuing education and training, and are less satisfied with their jobs. This article changes perspectives by asking whether it is better for the unemployed to take up a job for which they are overeducated or to remain unemployed and continue the search for adequate employment. Theoretically, we rely on the established confrontation of the stepping-stone and trap hypotheses, which make opposing predictions in terms of long-term employment chances and job quality. Using the German Socio-Economic Panel (1984–2012) and applying a dynamic propensity score matching approach, the analyses reveal an interesting trade-off. Although an overeducated re-entry increases the long-term employment chances persistently, it also implies strong lock-in effects into overeducation for up to 5 years after re-employment. In sum, the results support the stepping-stone hypothesis in terms of future employment chances, but also highlight non-negligible risks of remaining trapped in a job that is below one’s level of educational qualification.
Rigid employment protection legislation (EPL) has been blamed as the root of youths’ labour market integration problems in Europe. Many European countries have reacted by deregulating employment protection laws, often targeting youths as a group. However, doubts about the effectiveness of EPL reforms have arisen. Against this background, this article investigates whether EPL reforms succeeded in integrating youths into labour markets or whether they were ineffective and just promoted temporary employment as a crucial new social inequality in Europe. Based on two-step, three-level analyses using micro-data from the European Labour Force Survey for 19 European countries for the period from 1992 to 2012, our results show that deregulating the use of temporary contracts increased temporary employment risks of youths but did not reduce (for low-educated young men, even increased) unemployment risks. In contrast, we find some evidence that decreasing the protection of permanent jobs was successful in decreasing risks of inequality/insecurity (in terms of temporary jobs) without affecting the risks of labour market exclusion.