Research on the children of immigrants born in the host country (G2) consistently reveals disparities between their educational achievements and labour market outcomes compared to the majority population. This study provides new insights into understanding this disparity by examining patterns of overqualification—i.e., a downward educational mismatch—among the G2. Specifically, it explores 1) how overqualification patterns differ between the G2, foreign-born immigrants (G1), and the majority population and 2) how overqualification patterns vary across ten G2 ancestry groups compared to the majority population. Utilizing Swedish total population register data and linear probability models, this study estimates the probability of overqualification across different immigrant generations and ancestry groups, employing the Realised Matches method to measure overqualification. The results indicate that while G2 individuals have a lower probability of experiencing overqualification compared to G1, they face moderately higher probabilities of overqualification than the majority population—up to 19% higher. This disparity is particularly pronounced among G2 individuals with tertiary education and those of Iranian, Middle Eastern and North African, and Other Non-Western origins, with up to 39% higher probabilities. These findings suggest that G2 individuals, particularly those of non-Western origins, encounter significant challenges in translating their educational qualifications into commensurate employment within the Swedish labour market.

Overqualification is one of the key labor market disadvantages that the children of immigrants born in the host society––the second-generation (G2)––disproportionately experience compared to the majority population. A higher prevalence of overqualification among the G2 may result from their strategic choice to circumvent persistent unemployment and utilizing overqualification as a stepping stone into adequate employment ––as predicted by career mobility theory. Our paper investigates 1) how overqualification and unemployment fit into career progressions and 2) how this varies between the second-generation and majority populations. This study draws on Swedish register data on the total population and applies dynamic correlated random-effects multinomial logistic models. Our results show that the chances to move to adequate employment are higher for unemployed individuals than for overqualified workers. This result, which holds for both the majority population and G2 groups, is against the idea that overqualification serves as a stepping stone. We find that the chances of transitioning from overqualification and unemployment to adequate employment are higher for the majority population. This goes hand in hand with higher risks for G2 overqualified workers to become unemployed and for G2 unemployed individuals to remain entrapped into unemployment – thus creating a vicious cycle of disadvantages.

Children of immigrants born in the host country –the second generation (G2)–face higher risks of unemployment and overqualification compared to the majority native population in Western Europe. While the health effects of unemployment and overqualification are well documented, it remains unclear whether these factors impact the mental health of the G2 in the same way as in the majority population. This study uses Swedish register data to examine the association between different labor market disadvantages, i.e., unemployment and overqualification, and mental health outcomes among the G2 and the majority population. The outcome was measured as time to the first prescription of psychotropic medications (anxiolytics, sedatives, hypnotics, and antidepressants). Descriptive findings showed that psychotropic prescription rates are higher among G2 groups compared to the majority population. Cox proportional hazard models, adjusted for demographic and socioeconomic factors, indicated that unemployment similarly impacts mental health across origin groups, suggesting that being unemployed does not contribute to the mental health inequality between the G2 and the majority population. G2 individuals, especially G2 European individuals, showed higher risks of psychotropic prescriptions across all employment types. These findings imply that improving the labor market position is not sufficient to address mental health inequalities between the G2 and the majority population.