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Returns to overeducation: A longitudinal analysis of the U.S. labor market

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  • Tsai, Yuping

Abstract

Studies examining the wage effect of overeducation have generated very consistent results. Their findings suggest that, for workers with similar educational attainment, workers who are overeducated for the job suffer from significant wage penalties. However, most studies use cross-sectional data, implicitly assuming that workers are randomly assigned to being overeducated. Using data from the Panel Study of Income Dynamics for the period 1979-2005, this study conducts a panel analysis to account for time-constant individual characteristics. It uses a numerical approach to provide the wage effects in the presence of non-classical measurement error in the educational mismatch variables. The results provide evidence that overeducated status does not cause lower earnings. Instead, the significant wage differential found in previous studies is simply a result of ignoring the non-random assignment of workers to jobs.

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Bibliographic Info

Article provided by Elsevier in its journal Economics of Education Review.

Volume (Year): 29 (2010)
Issue (Month): 4 (August)
Pages: 606-617

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Handle: RePEc:eee:ecoedu:v:29:y:2010:i:4:p:606-617

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Web page: http://www.elsevier.com/locate/econedurev

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Keywords: Overeducation Undereducation Wage Measurement error;

References

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  17. McGoldrick, KimMarie & Robst, John, 1996. "Gender Differences in Overeducation: A Test of the Theory of Differential Overqualification," American Economic Review, American Economic Association, vol. 86(2), pages 280-84, May.
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Citations

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Cited by:
  1. Sattinger, Michael & Hartog, Joop, 2013. "Nash bargaining and the wage consequences of educational mismatches," Labour Economics, Elsevier, vol. 23(C), pages 50-56.
  2. Carroll, David & Tani, Massimiliano, 2013. "Over-education of recent higher education graduates: New Australian panel evidence," Economics of Education Review, Elsevier, vol. 32(C), pages 207-218.
  3. Slonimczyk, Fabian, 2011. "Earnings inequality and skill mismatch in the U.S.: 1973-2002," MPRA Paper 35449, University Library of Munich, Germany.
  4. Rebecca Morton & Jean-Robert Tyran & Erik Wengström, 2011. "Income and Ideology: How Personality Traits, Cognitive Abilities, and Education Shape Political Attitudes," Discussion Papers 11-08, University of Copenhagen. Department of Economics.
  5. Kedir, Abbi & Kyrizi, Andri & Martínez Mora, Francisco,, 2012. "Signalling and Productivity Effects of Overeducation: Is It Really a Waste of Resources?," Working Papers 2072/203170, Universitat Rovira i Virgili, Department of Economics.
  6. Summerfield, Fraser, 2014. "Labor Market Conditions, Skill Requirements and Education Mismatch," CLSSRN working papers clsrn_admin-2014-19, Vancouver School of Economics, revised 28 Apr 2014.
  7. Carroll, David & Tani, Massimiliano, 2013. "Job Search as a Determinant of Graduate Over-Education: Evidence from Australia," IZA Discussion Papers 7202, Institute for the Study of Labor (IZA).
  8. Patrizia Ordine & Giuseppe Rose, 2011. "Educational Mismatch and Wait Unemployment," Working Papers 19, AlmaLaurea Inter-University Consortium.
  9. Berlingieri, Francesco & Erdsiek, Daniel, 2012. "How relevant is job mismatch for German graduates?," ZEW Discussion Papers 12-075, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  10. Piracha, Matloob & Vadean, Florin, 2012. "Migrant Educational Mismatch and the Labour Market," IZA Discussion Papers 6414, Institute for the Study of Labor (IZA).
  11. Kornélia Lazányi, 2012. "Study for nothing? Literature overview of labour market opportunities for individuals with tertiary education," Proceedings of FIKUSZ '12, in: Pál Michelberger (ed.), Proceedings of FIKUSZ '12, pages 37-46 Óbuda University, Keleti Faculty of Business and Management.
  12. I�aki Iriondo & Teodosio P�rez-Amaral, 2013. "The Effect of Educational Mismatch on Wages Using European Panel Data," Working Papers 700, Queen Mary, University of London, School of Economics and Finance.

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