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Book part
Publication date: 11 May 2017

Seamus McGuinness and Konstantinos Pouliakas

This paper uses data from the Cedefop European Skills and Jobs survey (ESJS) (Cedefop, 2014, ESJS microdata are Cedefop copyright and are reproduced with the permission of…

Abstract

This paper uses data from the Cedefop European Skills and Jobs survey (ESJS) (Cedefop, 2014, ESJS microdata are Cedefop copyright and are reproduced with the permission of Cedefop. Further information is available at Cedefop, 2015), a new international dataset on skill mismatch of adult workers in 28 EU countries, to decompose the wage penalty of overeducated workers. The ESJ survey allows for integration of a rich set of variables in the estimation of the effect of overeducation on earnings, such as individuals’ job search motives and the skill needs of their jobs. Oaxaca decomposition techniques are employed to uncover the extent to which the earnings penalties of overeducated workers can be attributed to either (i) individual human capital attributes, (ii) job characteristics, (iii) information asymmetries, (iv) compensating job attributes, or (iv) assignment to jobs with different skill needs. Differences in human capital and job-skill requirements are important factors in explaining the wage premium. It is found that asymmetry of information accounts for a significant part of the overeducation wage penalty of tertiary education graduates, whereas job characteristics and the low skill content of their jobs can explain most of the wage gap for medium-qualified employees. Little evidence is found in favor of equilibrium theories of compensating wage differentials and career mobility. Accepting that much remains to be learned with regards to the drivers of overeducation, this paper provides evidence in support of the need for customized policy responses to tackle overeducation.

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Skill Mismatch in Labor Markets
Type: Book
ISBN: 978-1-78714-377-7

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Book part
Publication date: 11 May 2017

Giuseppe Lucio Gaeta, Giuseppe Lubrano Lavadera and Francesco Pastore

This paper contributes to the literature on overeducation by empirically investigating the wage penalty of job–education mismatch among PhD holders who completed their…

Abstract

This paper contributes to the literature on overeducation by empirically investigating the wage penalty of job–education mismatch among PhD holders who completed their studies in Italy; a country where the number of new doctoral recipients has dramatically increased over recent years while personnel employed in R&D activities is still below the European average. We use cross-sectional micro-data collected in 2009 and rely on different definitions of education–job mismatch such as, overeducation, overskilling, and dissatisfaction with the use of skills. We find that overeducation and skills dissatisfaction are associated with significantly lower wages but there is no wage penalty from overskilling. Furthermore, those who simultaneously report overeducation and skills dissatisfaction experience a particularly high wage penalty.

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Skill Mismatch in Labor Markets
Type: Book
ISBN: 978-1-78714-377-7

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Article
Publication date: 7 July 2020

Nuria Sánchez-Sánchez and Adolfo Cosme Fernández Puente

The phenomenon of overeducation and the magnitude and persistence of the imbalance impact are analysed for the Spanish labour market from 2006 to 2013.

Abstract

Purpose

The phenomenon of overeducation and the magnitude and persistence of the imbalance impact are analysed for the Spanish labour market from 2006 to 2013.

Design/methodology/approach

The authors present random-effects probit estimations comparing individuals and their short-term and long-term labour mismatches.

Findings

The results support the existence of long-term persistence (status in the previous year) and short-term persistence (status at the beginning of the observed period) in overeducation. Precariousness in the labour market, measured by temporality or by the strong destruction of employment, could force individuals to choose a job below their qualification. Additionally, the phenomenon of overeducation is shown to have increased in the period 2010–2013 in relation to the period 2006–2009 independently of the region considered, though those regions with higher unemployment rates display greater imbalances.

Research limitations/implications

Although the results come from two different samples, it is possible to conclude that overeducation is a phenomenon that tends to perpetuate over time in Spain.

Practical implications

One of the issues of greatest interest that is crucial to assess the relevance of the spreading of overeducation is whether overeducation can be considered as a temporal mismatch, in which case the seriousness of the problem would not be so important, or, on the contrary, as a persistent one, in which case, governments should take it into account in their education reform programmes.

Originality/value

Overeducation persistence has been studied in countries such as the United States, Canada, Switzerland or Germany; however, in Spain, there are hardly any studies. Spanish labour market has certain specificities that make the analyses relevant: the high unemployment rates and high elasticity of employment with respect to the economic cycles. Under these circumstances, workers could opt for more stable positions that require a lower qualification than the one they have. This option could be even more convenient during crisis. Additionally, the article includes a disaggregated analysis by Spanish regions. The differences in the unemployment rates within and between regions are significant (some of them had at the beginning of the crisis an unemployment rate close to 7%, while in others it exceeded 12%) which allows the authors to study the phenomenon in different contexts.

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Journal of Economic Studies, vol. 48 no. 2
Type: Research Article
ISSN: 0144-3585

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Article
Publication date: 1 February 2006

Andrea Cutillo and Giorgio Di Pietro

The aim of this paper is to analyse the effects of overeducation on wages in the Italian graduate labour market.

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1175

Abstract

Purpose

The aim of this paper is to analyse the effects of overeducation on wages in the Italian graduate labour market.

Design/methodology/approach

The relationship between overeducation and wages is analysed using a double selection approach. Two basic individuals' decisions are explicitly considered in the analysis: the decision to work and the choice of occupation. The first one could create a problem of sample selection bias, whereas the second one could generate an endogeneity bias.

Findings

Although in line with previous studies it was found that overeducated workers earn less than their appropriately educated peers, the results suggest also that this pay gap is significantly higher when a double selectivity approach is used than when an OLS approach is employed. The main reason why OLS techniques significantly underestimate the wage penalty associated with overeducation appears to be the bias introduced by the endogeneity of overeducation.

Originality/value

Recent studies have examined the impact of overeducation on earnings using a single selection framework. This paper extends previous work by analysing the relationship between overeducation and wages using a double selection approach. Additionally, little research has focused on overeducation in Italy.

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International Journal of Manpower, vol. 27 no. 2
Type: Research Article
ISSN: 0143-7720

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Article
Publication date: 6 June 2016

Dieter Verhaest and Elsy Verhofstadt

– The purpose of this paper is to investigate how job demands and control contribute to the relationship between overeducation and job satisfaction.

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2202

Abstract

Purpose

The purpose of this paper is to investigate how job demands and control contribute to the relationship between overeducation and job satisfaction.

Design/methodology/approach

The analysis is based on data for Belgian young workers up to the age of 26. The authors execute regression analyses, with autonomy, quantitative demands and job satisfaction as dependent variables. The authors account for unobserved individual heterogeneity by means of panel-data techniques.

Findings

The results reveal a significant role of demands and control for the relationship between overeducation and job satisfaction. At career start, overeducated workers have less control than adequately educated individuals with similar skills levels, but more control than adequately educated employees doing similar work. Moreover, their control increases faster over the career than that of adequately educated workers with a similar educational background. Finally, demands have less adverse effects on satisfaction for high-skilled workers, irrespective of their match, while control moderates the negative satisfaction effect of overeducation.

Research limitations/implications

Future research should look beyond the early career and focus on other potential compensation mechanisms for overeducation. Also the role of underlying mechanisms, such as job crafting, deserves more attention.

Practical implications

The results suggest that providing more autonomy is an effective strategy to avoid job dissatisfaction among overeducated workers.

Originality/value

The study connects two areas of research, namely, that on overeducation and its consequences and that on the role of job demands and control for workers’ well-being. The results contribute to a better understanding why overeducation persists. Moreover, they are consistent with the hypothesis that employers hire overeducated workers because they require less monitoring and are more able to cope with demands, although more direct evidence on this is needed.

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International Journal of Manpower, vol. 37 no. 3
Type: Research Article
ISSN: 0143-7720

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Article
Publication date: 6 August 2018

Carolina Castagnetti, Luisa Rosti and Marina Töpfer

The purpose of this paper is to highlight the pivotal role of overeducation in explaining the unexplained part of the gender pay gap (GPG), i.e. the component usually…

Abstract

Purpose

The purpose of this paper is to highlight the pivotal role of overeducation in explaining the unexplained part of the gender pay gap (GPG), i.e. the component usually attributed to gender discrimination in the Oaxaca-Blinder decomposition.

Design/methodology/approach

The study uses a large Italian data set (ISFOL PLUS 2005–2014) to estimate the GPG among properly educated and overeducated workers. The model simultaneously accounts for both participation bias and endogeneity bias by applying an extension of the Heckman’s two-stage procedure.

Findings

Estimates show that the GPG is significantly higher among overeducated than among properly educated workers because women’s unobservable characteristics driving female employment into overeducation also drag down female wages more than men’s unobservable characteristics drag down male wages. Correcting for the participation and overeducation decisions, the unexplained portion of the GPG disappears among overeducated workers, while it remains significant among properly educated individuals.

Originality/value

The authors draw the conclusion that overeducation is, first, a first-best matching for individuals (both men and women) compensating with more education for their lower productive characteristics. Second, it may be a signaling device for women spending their useless-for-the-job diploma to inform employers on their valuable though unobservable productive characteristics and fight gender wage discrimination. The results favor education as a tool of counteracting gender discrimination. Hence, as females are less overeducated than males despite their larger representation in higher education, there should not be concern that expanding higher education will disadvantage females.

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International Journal of Manpower, vol. 39 no. 5
Type: Research Article
ISSN: 0143-7720

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Article
Publication date: 14 September 2010

Dieter Verhaest and Eddy Omey

The purpose of this paper is to assess the measurement sensitivity of the estimated determinants of overeducation.

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1432

Abstract

Purpose

The purpose of this paper is to assess the measurement sensitivity of the estimated determinants of overeducation.

Design/methodology/approach

The paper analyses the determinants of overeducation among Flemish school leavers in their first job by means of probit regression analysis. Overeducation is measured on the basis of job analysis (JA), self‐assessments and realised matches.

Findings

The results demonstrate that the application of different overeducation measures sometimes leads to different outcomes. Only a few variables – for instance the student's academic grade in the final year – are consistently found to be important for the explanation of overeducation. Some outcomes are consistent with the supposition that several indicators actually measure other concepts.

Research limitations/implications

Further research using JA measures that are based on alternative and more recent occupational classifications would be useful.

Originality/value

The application of different measures provides further insight into the overeducation measurement problem.

Details

International Journal of Manpower, vol. 31 no. 6
Type: Research Article
ISSN: 0143-7720

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Article
Publication date: 1 March 2004

Felix Bu¨chel and Matthias Pollmann‐Schult

Tests the hypothesis that overeducation is contingent upon the differing human capital endowments of employees. The analyses are based on data from the German Life History…

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6164

Abstract

Tests the hypothesis that overeducation is contingent upon the differing human capital endowments of employees. The analyses are based on data from the German Life History Study (GLHS). Applies a trivariate probit model which takes into account the selective acquisition of school qualifications, and the selective choice of vocational training programs with varying levels of quality. The findings confirm that the type of school diploma obtained has a strong effect on the later risk of overeducation. Furthermore, in the case of the intermediate school diploma – the qualification typically held by those entering initial vocational training in Germany – the grade attained also proves to have a strong effect on the risk of overeducation. In line with the existing literature, this paper finds that the risk of overeducation decreases as traditional human capital endowments such as experience, tenure, and on‐the‐job‐training increase.

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International Journal of Manpower, vol. 25 no. 2
Type: Research Article
ISSN: 0143-7720

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Article
Publication date: 3 August 2015

Patrizia Ordine and Giuseppe Rose

– The purpose of this paper is to investigate educational mismatch and its interrelationships with unemployment duration.

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1441

Abstract

Purpose

The purpose of this paper is to investigate educational mismatch and its interrelationships with unemployment duration.

Design/methodology/approach

The authors study unemployment histories of Italian workers using dependent competing risk models. The authors evaluate the impact of overeducation on wage using propensity score and treatment models.

Findings

The authors show that overeducated have longer unemployment spells than their well-matched peers. This evidence implies that when assessing the impact of overeducation on wages, the duration of joblessness should be taken into account to evaluate possible additional unemployment scarring effects. The authors show that when controlling for unemployment spell duration the wage effect of overeducation significantly increases of about 7 percent. This result is supported by improvements in the sensitivity analysis.

Originality/value

The findings are consistent with an interpretation of educational mismatch as a penalizing phenomenon in the individuals’ working life associated with long-term unemployment.

Details

International Journal of Manpower, vol. 36 no. 5
Type: Research Article
ISSN: 0143-7720

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Article
Publication date: 6 February 2019

Kamalbek Karymshakov and Burulcha Sulaimanova

The purpose of this paper is twofold: first, it analyses the relationship between educational level, the school-to-work transition period for youth and positions which…

Abstract

Purpose

The purpose of this paper is twofold: first, it analyses the relationship between educational level, the school-to-work transition period for youth and positions which suffer from an education-job mismatch in Kyrgyzstan; and second, it investigates the effect of the education-job mismatch on the wages of youth in Kyrgyzstan.

Design/methodology/approach

The study uses the International Labor Organization 2013 data from the school-to-work transition survey for Kyrgyzstan. The Kaplan–Meier failure analysis is employed to demonstrate the relationship between school-to-work transition and mismatch status. To investigate the effect of an education-job mismatch on wages, a Mincer-type equation with OLS estimations is used. Along with this, taking into consideration potential unobserved heterogeneity issue, a propensity score matching method is applied.

Findings

The results indicate a large difference between those with tertiary education and those with non-tertiary education in terms of the probability of being employed with a wrong match. Young individuals without tertiary education are more likely to be employed with a right match. Analysis of the impact of overeducation on wages shows that the impact of overeducation depends on how it is measured. According to the objective approach, overeducated male individuals receive low wages compared to well matched, but estimation results based on the total sample of subjective approach indicate the positive effects of overeducation on wage.

Originality/value

This paper contributes to the existing literature on the school-to-work transition and overeducation by focusing on one of the transition economies, which has been largely neglected by the literature.

Details

International Journal of Manpower, vol. 40 no. 8
Type: Research Article
ISSN: 0143-7720

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