Overqualified and pushed to start a business? How overqualification shapes women's entrepreneurship in the European Union

Purpose The European Union (EU) labour market is characterised by a paradox: women currently outperform men in terms of educational attainment, yet they face gender inequalities in the labour market and overqualification. This study examines whether overqualification pushes women into entrepreneurship as an alternative to employment in the EU and how contextual factors influence this relationship. Design/methodology/approach Using macro-panel data from all 27 EU member states covering the years 2006–2023, the study applies fixed-panel regression models with Driscoll-Kraay standard errors to estimate the effect of women's overqualification on their entrepreneurship. Findings The results show an inverted U-shaped relationship; higher female overqualification is associated with higher women's entrepreneurship, but only up to a certain threshold of overqualified women (approx. 22.6%). Above this threshold, the effect diminishes. However, this effect is moderated by income inequality as measured by the Gini index, it is weaker in more unequal societies, where higher income inequality reduces the impact of women's overqualification on entrepreneurship. The marginal effect of women's overqualification on entrepreneurship steadily declines as inequality increases; beyond a certain threshold (approx. Gini = 36), the effect approaches zero, suggesting that in highly unequal societies, overqualification ceases to motivate women's entrepreneurial engagement. Overall, overqualification motivates women to pursue entrepreneurship only when overqualification and income inequality are low; beyond that, its impact diminishes. Originality/value The study contributes to the understanding of gendered entrepreneurship by identifying overqualification as a factor influencing women's entrepreneurship and highlighting the moderating role of systematic inequalities.