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Inefficient self-selection into education and wage inequality

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  • Ordine, Patrizia
  • Rose, Giuseppe

Abstract

Abstract This paper proposes a theoretical framework where within graduates wage inequality is related to overeducation/educational mismatch in the labor market. We show that wage inequality may arise because of inefficient self-selection into education in the presence of ability-complementary technological progress and asymmetric information on individuals' ability. In this setting, a crucial role is played by educational quality since it determines the signaling mechanisms in the labor market. We report some empirical evidence on the impact of mismatch, individual ability, family background, and university features on wages of Italian graduates and we suggest the importance of considering education quality as a policy instrument for reducing educational mismatch and wage inequality.

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Bibliographic Info

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

Volume (Year): 30 (2011)
Issue (Month): 4 (August)
Pages: 582-597

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Handle: RePEc:eee:ecoedu:v:30:y:2011:i:4:p:582-597

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

Related research

Keywords: Wage inequality Mismatch Higher education quality Signaling equilibria Selection models;

References

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Citations

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Cited by:
  1. Emanuela Ghignoni & Alina Verashchagina, 2012. "Educational qualifications mismatch in Europe Is it demand or supply driven?," Working Papers 154, University of Rome La Sapienza, Department of Public Economics.
  2. Emanuela Ghignoni, 2011. "Young workers‟ overeducation and cohort effects in “P.I.G.S.†countries versus the Netherlands: a pseudo-panel analysis," Working Papers 147, University of Rome La Sapienza, Department of Public Economics.
  3. Croce, Giuseppe & Ghignoni, Emanuela, 2011. "Overeducation and spatial flexibility in Italian local labour markets," MPRA Paper 29670, University Library of Munich, Germany.
  4. Rose, Giuseppe, 2013. "Endogenous ranking in a two-sector urn-ball matching process," Economics Discussion Papers 2013-40, Kiel Institute for the World Economy.
  5. Patrizia Ordine & Giuseppe Rose, 2011. "Educational Mismatch and Wait Unemployment," Working Papers 19, AlmaLaurea Inter-University Consortium.

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