The children of immigrants born in the host country—the second generation (G2)—encounter several challenges in the labor market and often lag behind the majority population (natives with two native-born parents) in many Western European countries. Overqualification, defined as possessing educational qualifications exceeding those required by one’s job, is one important yet understudied aspect of G2's socioeconomic integration. While previous research consistently reports that foreign-born immigrants (the first generation, G1) are overrepresented among the overqualified workforce, it remains unclear whether this disadvantage extends to the G2 and how it impacts their socioeconomic outcomes. This doctoral dissertation leverages Swedish register data to explore the relationship between overqualification and the socioeconomic integration of the G2 in Sweden, focusing on the accumulation of negative labor market and health consequences.

Study Ⅰ explores the patterns of overqualification among the G2 in Sweden, comparing them to both the majority population and the G1. It also investigates heterogeneity within the G2, considering their diverse ancestral origins. The findings reveal that although G2 individuals have better occupational returns to education than the G1, they still face higher probabilities of overqualification than the majority population. These patterns are especially pronounced among those with non-Western backgrounds and tertiary degrees.

Study Ⅱ investigates whether overqualification serves as a catalyst for career progression among the G2. By employing dynamic correlated random-effects multinomial logistic models, the study estimates the probabilities of transitioning between multiple labor market states—adequately matched employment, overqualification, and unemployment. The results indicate that for no group does overqualification act as a stepping stone toward better employment compared to remaining in unemployment. In fact, for G2 individuals with non-Western origins, overqualification leads to higher unemployment risks compared to the majority population, suggesting that overqualification may lead to a vicious cycle of labor market disadvantages.

Study Ⅲ examines the impact of overqualification on earnings levels and annual earnings growth among the G2 compared to the majority population. The study uses growth curve models to estimate differences in initial earnings at labor market entry and subsequent annual earnings growth by qualification mismatch status and ancestral origin. The findings reveal a counteracting relationship between overqualification and earnings. Overqualification contributes to larger earnings penalties at labor market entry between the G2 and the majority population, but it is also associated with accelerated earnings growth over time. Despite accelerated growth associated with overqualification, the initial earnings gap persists in the short term, partially challenging the predictions of career mobility theory.

Study Ⅳ investigates the association between unemployment, overqualification, and mental health among the G2 compared to the majority population. Employing Cox proportional hazards models, the study assesses the risk of first-time psychotropic medication prescriptions as an indicator of mental health problems, considering individuals’ origin and labor market status. The findings confirm that both unemployment and overqualification are associated with poorer mental health outcomes. Notably, mental health disparities between the G2 and the majority population are apparent only among the employed, suggesting that improving the labor market positions of the G2 may not necessarily reduce mental health inequalities.

Overall, this dissertation sheds light on an often-neglected dimension of the socioeconomic integration of the second-generation children of immigrants. It demonstrates that overqualification contributes to negative socioeconomic and health outcomes for G2 individuals despite their high levels of human capital. The findings underscore the need for policy measures aimed at improving employment quality, specifically by ensuring better alignment between educational qualifications and occupations, particularly for the G2.