“Overeducation, skills and wage penalty: Evidence for Spain using PIAAC data”
AbstractThe literature on educational mismatches finds that overeducated workers suffer a wage penalty compared with properly educated workers with the same level of education. Recent literature also suggests that individuals’ skill heterogeneity could explain wage differences between overeducated and properly matched workers. The hypothesis is that overeducated workers earn less due to their lower competences and skills in relative terms. However, that hypothesis has been rarely tested due to data limitations on individuals’ skills. The aim of this paper is to test the individuals’ skill heterogeneity theory in Spain using microdata from PIAAC, because it is one of the developed countries supporting the highest overeducation rates and where its adult population holds the lowest level of skills among a set of developed countries. Our hypothesis is that the wage penalty of overeducation in Spain is explained by the lower skill level of overeducated workers. The obtained evidence confirms this hypothesis but only to a certain extent as skills only explain partially the wage penalty of overeducation.
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Bibliographic InfoPaper provided by University of Barcelona, Regional Quantitative Analysis Group in its series AQR Working Papers with number 201406.
Length: 29 pages
Date of creation: Mar 2014
Date of revision: Mar 2014
overeducation; individual’s skill heterogeneity; wages JEL classification: J31; I21; C13;
Find related papers by JEL classification:
- wag - - - - - -
- JEL - Labor and Demographic Economics - - - - -
- cla - - - - - -
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
- C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General
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