For most workers, access to suitable employment is severely restricted by the fact that they
look for jobs in the regional labour market rather than the global one. In this paper we
analyse how macro-level opportunities (regional labour market characteristics) and microlevel
restrictions (the extent to which job searchers are restricted to the regional labour
market) can help to explain the phenomenon of overeducation. For the purposes of this
project we obtained special permission to link regional data supplied by the German Federal
Office for Building and Regional Planning to data provided by the respondents in the German
Socio-Economic Panel (GSOEP), based on their region of residence. The use of multilevel
models made it possible to combine both individual and regional characteristics in the same
models. In addition, we used the Heckman two-step procedure to control for selective access
to employment. The results show that the size of the labour market is an important factor in
avoiding overeducation: looking for a job on a large labour market increases the probability of
finding a suitable job. Access to a car for personal use and a longer commuting time reduce
the risk of working in a job for which one is overeducated.
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