Overeducation in the Labour Market: Reality or Fiction?

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Overeducation in the Labour Market: Reality or Fiction?

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Seamus McGuinness () (Economic Research Institute of Northern Ireland)

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Seamus McGuinness

Abstract

This paper presents a review of the literature on overeducation. The paper assesses the consistency of overeducation within the context of a number of theoretical frameworks including Human Capital Theory (HCT) and Assignment Theory. The analysis goes on to discuss the various measurement controversies associated with the study of overeducation in order to provide an assessment of the extent to which the impacts of the phenomenon represent an economic reality as opposed to a statistical artefact. After reviewing the literature it is concluded that the impacts of overeducation are likely to be non-trivial and that the phenomenon may potentially be costly to individuals and firms, as well as the economy more generally. The existence of overeducation also raises some doubts with respect to the validity of some of the central assumption and predictions of Human Capital Theory that are unlikely to be fully explained by gaps in the standard wage equation framework.

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Paper provided by Economic Research Institute of Northern Ireland in its series Working Papers ERINI with number 2.

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Length: 36 pages
Date of creation: Oct 2004
Date of revision:
Handle: RePEc:eri:wperin:2

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Find related papers by JEL classification:
I20 - Health, Education, and Welfare - - Education - - - General
I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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Felix Buchel & Harminder Battu, 2003. "The Theory of Differential Overqualification: Does it Work?," Scottish Journal of Political Economy, Scottish Economic Society, vol. 50(1), pages 1-16, February. [Downloadable!] (restricted)
Bauer, Thomas K., 2002. "Educational mismatch and wages: a panel analysis," Economics of Education Review, Elsevier, vol. 21(3), pages 221-229, June. [Downloadable!] (restricted)
Battu, H. & Belfield, C. R. & Sloane, P. J., . "Overeducation Among Graduates: A Cohort View," Working Papers 98-03, Department of Economics, University of Aberdeen. [Downloadable!]

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