Qualifications, job mismatch, and workers with disabilities

Using panel estimation on longitudinal data from the Panel Survey of Employment for the Disabled (PSED), this study examines the relationship between wages and job mismatch among disabled people in Korea. This paper uses a more detailed definition of job mismatch than utilized in earlier literature. This definition recognizes three forms of over-qualifications: over-educated only, over-skilled only, and a combination of both over-educated and over-skilled. Because earlier studies have only analyzed both over-education and over-skilling together for workers with disabilities they were thus subject to potential omitted variable problems. This analysis finds that there is a strong negative association between wages and all three kinds of over-qualification. In particular, workers with disabilities face a severe wage penalty when they are both over-educated and over-skilled. However, a causal relationship between wages and over-qualification is not evident after accounting for potential endogeneity problems and/or unobserved individual characteristics. This suggests that unobserved systematic differences play a substantial role in the determination of over-qualification effects on the wages of the disabled.