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Educational mismatch and its impact on earnings: evidence from Indian labour market

Author

Listed:
  • Swati Sharma
  • Prateek Sharma

Abstract

Purpose - The purpose of this paper is to examine the incidence and determinants of educational mismatch in the Indian labour market. It also attempts to measure the wage effects of educational mismatch, and other individual and work-related characteristics. Design/methodology/approach - Educational mismatch is modelled using multiple Mincerian equations. Wage effects are measured using the novel identification strategy of Lewbel (2012), which constructs internal instruments to obviate potential endogeneity problems. Findings - The authors find that the returns to over-education are positive and significant, while the returns to under-education are negative and significant. However, over-educated would earn less than the workers who have the same educational level, but who are engaged in occupations for which they are adequately educated. Originality/value - This study is one of the earliest attempts to identify the determinants of educational mismatch in the Indian labour market. Additionally, it measures the effect of educational mismatch on labour market earnings, as well as marginal wage effects of each surplus (or deficit) year of education. Methodological improvements ensure that the results are robust to the sample selection bias, as well as the endogeneity bias.

Suggested Citation

  • Swati Sharma & Prateek Sharma, 2017. "Educational mismatch and its impact on earnings: evidence from Indian labour market," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 44(12), pages 1778-1795, December.
    • Handle: RePEc:eme:ijsepp:ijse-05-2016-0134
    DOI: 10.1108/IJSE-05-2016-0134
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    Citations

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    Cited by:

    1. Shweta Bahl & Ajay Sharma, 2021. "Education–Occupation Mismatch and Dispersion in Returns to Education: Evidence from India," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 153(1), pages 251-298, January.
    2. Theresa Geißler & Laszlo Goerke, 2023. "Educational Mismatch and Labour Market Institutions: The Role of Gender," Working Papers 2023.14, International Network for Economic Research - INFER.
    3. Ronak Maheshwari & Brinda Viswanathan, 2024. "Work Activity Status of Male Youth in India: Role of Social Networks," Working Papers 2024-255, Madras School of Economics,Chennai,India.
    4. María Paola Sevilla & Mauricio Farías & Daniela Luengo-Aravena, 2021. "Patterns and Persistence of Educational Mismatch: A Trajectory Approach Using Chilean Panel Data," Social Sciences, MDPI, vol. 10(9), pages 1-24, September.
    5. Daniel Francois Meyer & Precious Mncayi, 2021. "An Analysis of Underemployment among Young Graduates: The Case of a Higher Education Institution in South Africa," Economies, MDPI, vol. 9(4), pages 1-16, December.

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