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Estimating the returns to educational mismatch with panel data: the role of unobserved heterogeneity

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  • Marco PECORARO

    (SFM, Université de Neuchâtel and UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

Abstract

Using longitudinal data from the Swiss Household Panel, this analysis suggests that the cross-sectional estimates of the returns to educational mismatch are significantly biased when unobserved heterogeneity is omitted in the wage equation. The results of the standard fixed effects model indeed demonstrate that the wage returns to education are independent of the job requirements. Hence, this empirical analysis supports the human capital interpretation of the Swiss labour market.

Suggested Citation

  • Marco PECORARO, 2011. "Estimating the returns to educational mismatch with panel data: the role of unobserved heterogeneity," LIDAM Discussion Papers IRES 2011036, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    • Handle: RePEc:ctl:louvir:2011036
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    File URL: http://sites.uclouvain.be/econ/DP/IRES/2011036.pdf
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    References listed on IDEAS

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    1. Marco Pecoraro, 2014. "Is There Still a Wage Penalty for Being Overeducated But Well-matched in Skills? A Panel Data Analysis of a Swiss Graduate Cohort," LABOUR, CEIS, vol. 28(3), pages 309-337, September.

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    Keywords

    Educational mismatch; wages; panel data analysis; human capital;
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