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Using a representative survey of young persons having left full-time education in France in 1998 and interviewed in 2001 and 2005, the purpose of this paper is to examine the process of their integration into normal employment (a stable job with a standard employment contract) and the extent to which job matches are inefficient in the sense that the pay in a job is below an individual’s potential earnings. The latter are determined principally by diploma level and educational specialisation, although other forms of training and labour market experience are relevant.

A stochastic earnings frontier approach is used in order to examine workers’ ability to capture their full potential earnings in labour markets where there is inefficient job matching (due to the lack of information, discrimination, over-education or the process of integration).

The results suggest that young workers manage to obtain on average about 82 per cent of their potential earnings three years after leaving full-time education and earnings inefficiency had disappeared four years later. The results are robust to the treatment of selectivity arising from the exclusion of the unemployed in the estimation of the frontier.

The stochastic earnings frontier is a useful and appropriate tool for modelling the process of labour market integration of certain groups (young persons, migrants and the long-term unemployed) where over-education due to inefficient initial job matches occurs. Over time this situation tends to be rectified as job mobility leads to improved matching and less inefficiency.

This paper aims to review policy innovations in China for addressing the graduate unemployment crisis that has been created by the expansion of higher education in the past decade.

The authors draw on government documents, research findings, and mass media reports to highlight the key measures of the Chinese government to alleviate the over‐education problem and to improve college graduates' employment prospects.

The review describes government efforts both at the institutional level to enhance student employability and at the national level to create alternative employment channels. The Chinese experiences show that the challenges posed by the graduate employment crisis may turn out to be a new opportunity to reform higher education in order to better address the needs unique to a country's own society.

The review of the Chinese case will inspire policy makers in other countries to seek alternative routes for the development of their own higher education.

This is the first study of its kind to address the recent policy innovations and their implications for potential reform.

Employment and skill mismatch among youth constitute a major obstacle for access to the job market in the Middle East and North African region. The purpose of this paper is to explore factors explaining employment and the perception of the skill-mismatch problem among the youth in Lebanon using a novel data set covering young people aged from 15 to 29. The paper provides a set of empirical insights that help in the design of public policy targeting school-to-work transition.

The authors control for a rich set of youth and household characteristics to jointly estimate the probability of being employed and the likelihood of reporting a skill-mismatch problem. The empirical analysis uses a bivariate probit model where the first equation estimates the employment status while the second estimates the determinants of skill-mismatch perceptions. The bivariate probit model considers the error terms in both equations to be correlated and the model tests for such a correlation. The authors estimate the model recursively by controlling for the employment dummy variable in the skill-mismatch equation since employed youth could be more or less likely to perceive the skill mismatch. The estimation is conducted first over the whole sample of youth, and then it is implemented by gender and region.

The authors find that youth employment is mainly correlated with age, being male, being single, having received vocational training and financial support from parents, living with parents and receiving current education. The skill-mismatch perceptions are mainly driven by being male, being single, having received post-secondary education and belonging to upper and middle social classes. The authors also find that employability level and skill-mismatch problems are jointly determined in the labor market for males and in the core region only.

The paper covers a country that is neglected in the literature on the employment-skill mismatch nexus in the context of school-to-work transition. The study also uses a novel data set focusing on youth. The paper contributes to our understanding of the school-to-work transition in particular and to the youth-to-adulthood transition in general.

Policy makers, providers and consumers of education have collaborated in the evolution of a self‐regulating, artificial market in education which is losing its purpose. All the players have tricked themselves into believing that the route to a new land of opportunity, is via factory‐based, organised education. This form of education has left society en masse considerably short‐changed. It cannot be sustained indefinitely due to its artificisality and lack of real purpose. This paper attempts to rediscover real education by exposing the risks and limitations of education factories. It suggests that the prevailing factory paradigm is favoured by policy‐makers and administrators as providing the outward appearance of modernity, control and efficiency. Education is literally too vital an issue to assume the structures and processes of an alien, borrowed production management paradigm.

The purpose of this paper is to analyse immigrant‐native wage differentials in Spain.

The paper exploits the Earnings Structure Survey 2006, which is the first nationally representative sample of both foreign and Spanish employees. Using the Machado‐Mata econometric procedure, wage differentials between locals and foreigners are decomposed into the gap related to characteristics and the one due to different returns on endowments (i.e. discrimination).

The paper finds that, in absolute terms, the latter component grows across the wage distribution, reflecting the existence of a kind of glass ceiling, consistent with the evidence of over‐education found in previous research.

The paper for the first time explores earnings differentials between immigrant and Spanish workers using a nationally representative database. In addition, standard errors are computed in order to determine if the gaps are statistically significant, a task not addressed by previous works. Finally, the work is relevant as Spain has become a host country only a few years ago.

The authors provide first evidence regarding the direct effect of a hiring policy oriented through higher (over) education on firm productivity. Moreover, the authors shine light on the moderating role of the working environment of the firm, qualified as (1) high-tech/knowledge-intensive and (2) knowledge-intensive activities.

The authors use a detailed Belgian firm panel data and compute a measure of high-education hiring policy robust to sectorial bias.

The authors show that firms that decide to increase their hiring standards with a higher risk to hire overeducated workers are found to be more productive than others which follow the hiring norms in terms of educational levels. Concerning the role of the technological environment, the authors show that high-tech firms may take advantage of additional skills provided by highly educated workers to a bigger extent, such hiring policy leading to even higher productivity improvements.

Unlike much of the earlier literature (still essentially focussed on workers' wages, job satisfaction and related attitudes and behaviours), the authors’ econometric estimates are based on direct measures of productivity. They are also robust to a range of measurement issues, such as time-invariant labour heterogeneity and firm characteristics.

The purpose of this paper is to estimate the incidence of educational mismatch in Italy and the return to investment in education, controlling for employees’ ability. Contrary to most existing studies, the heterogeneity of individual performance is measured directly through the assessment of required and provided skills.

Based on original data including over 3,600 face‐to‐face interviews, this paper appraises the incidence of self‐assessed educational mismatch in the Italian private sector and estimates wage models of the economic returns to educational mismatch, skill requirements and provided skills.

In Italy, under‐educated employees outnumber over‐educated ones and returns to required education and over‐education are lower than in other industrialised countries. Individual heterogeneous ability, as captured by individual skills, is a significant determinant of wage, although the inclusion of direct measures of required and provided skills does not substantially affect the estimated coefficients of the return to investment in education.

The omission of controls for the heterogeneous ability of employees biases the results of traditional ordinary least squares (OLS) estimates of wage models. However, the bias may be small enough to make simple OLS estimates on existing cross‐sectional data an acceptable compromise to provide policy makers with reasonably accurate and up‐to‐date information.

The paper provides a direct appreciation of individual heterogeneity that other studies can capture only through sophisticated indirect econometric techniques. In addition, the paper extends the set of available cross‐country comparisons by estimating the educational mismatch and the returns to educational and skill mismatches in the overall Italian private labour market.

The main purpose of this paper is to investigate the sheepskin effects in the returns to education in the Sri Lankan labor market by ethnicity.

The study is based on the latest Sri Lankan Consumer Finance and Socio‐economic Survey. The study employs the quantile regression method for each conditional quantile wage group, rather than the mean regression analysis used in most labor market analysis. The quantile regression technique fits hyperplanes through out the conditional wage and is ideal for characterizing the entire wage distribution. The standard Mincerian wage equation was estimated for the full sample of male workers and separately for the two main ethnic groups in Sri Lanka.

The empirical findings are broadly encouraging. Quantile regression results suggest that average returns to education for both ethnic groups differs significantly from the returns at the two extreme ends of the wage distribution. In general, the returns to education are positive for both groups, but the returns are higher for Sinhalese workers than for Tamil. An increasing trend in returns to education is evident for both ethnic groups when moving up wage distribution. Sinhalese workers experience higher returns to education than for Tamil especially at the bottom of the wage distribution, but the difference becomes less at the upper part of the distribution. Estimated results with spline in years of education suggest that returns to secondary education are higher for Sinhalese workers, but the returns to tertiary education are greater for Tamil workers at the upper part of the wage distribution. Findings indicate that returns to experience are also higher for Sinhalese workers than for Tamil workers.

This is the first study that examines sheepskin effects in the returns to education by ethnicity in Sri Lanka in a Mincerian framework, employing quantile regression models.