Overeducation, Overskilling and Mental Well-being

Abstract

This paper estimates the effects of overeducation and overskilling on mental well-being in Australia. Using fixed-effects (FE) panel estimations, our analysis shows that overeducation does not significantly affect people’s mental well-being. However, overskilling has strong detrimental consequences for mental well-being. Using a panel data quantile regression model with FE, we show that the negative effects of overskilling are highly heterogeneous, with larger impact at the lower end of the distribution of mental well-being. Furthermore, our dynamic analysis shows that the damaging effects of overskilling are transitory, and we find evidence of complete mental well-being adaptation one year after becoming overskilled.