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Overeducation, Undereducation, and the Theory of Career Mobility

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  • Büchel, Felix

    (Max Planck Institute for Human Development)

  • Mertens, Antje

    ()
    (Berlin School of Economics and Law)

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    Abstract

    The Theory of career mobility (Sicherman and Galor 1990) claims that wage penalties for overeducated workers are compensated by better promotion prospects. A corresponding empirical test by Sicherman (1991), using mobility to an occupation with higher human capital requirements as an indicator for upward career mobility, was successful confirmed by Robst (1995). However, both tests include controls for the opposite phenomenon of undereeducation and report ambiguous results without offering sound theoretical explanations. Estimating random effects probits with data from the German Socio-Economic Panel we show that part of the problem is neglecting the base effect of the occupational starting position. This severely affects the stability of the results, because career mobility is mainly observed from jobs with low qualification requirements. Moreover, we show that Sicherman’s indicator for upward career mobilty and similar indicators as moving to a higher status position are not valid indicators. When using relative wage growth (and this is the strategic variable underlying the theory of Sicherman and Galor) overeducated workers are found to experience clearly lower relative wage growth rates than correctly allocated workers; the contrary is the case for undereducated workers. This pattern of results severely jeopardizes the career mobility model and can be better explained using signaling and segmentation theories. Based on the well-known positive correlation of access to training and upward career mobility the plausibility of our results is supported by the finding that access to informal and formal on-the-job training is relatively worse for overeducated and better for undereducated workers.

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    File URL: http://ftp.iza.org/dp195.pdf
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    Bibliographic Info

    Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 195.

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    Length: 38 pages
    Date of creation: Sep 2000
    Date of revision:
    Publication status: published in: Applied Economics, 2004, 36 (8), 803 - 816
    Handle: RePEc:iza:izadps:dp195

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    Related research

    Keywords: Qualification mismatch; overeducation; career mobility; wage change;

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    References

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Dolton, Peter & Vignoles, Anna, 2000. "The incidence and effects of overeducation in the U.K. graduate labour market," Economics of Education Review, Elsevier, vol. 19(2), pages 179-198, April.
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    Cited by:
    1. Groeneveld, Sandra & Hartog, Joop, 2004. "Overeducation, wages and promotions within the firm," Labour Economics, Elsevier, vol. 11(6), pages 701-714, December.
    2. Luiz Alberto Esteves, 2007. "Incompatibilidade Escolaridade-Ocupação e Salários: Evidências de uma Empresa Industrial Brasileira," Working Papers 0059, Universidade Federal do Paraná, Department of Economics.
    3. Galasi, Péter, 2004. "Túlképzés, alulképzés és bérhozam a magyar munkaerőpiacon, 1994-2002
      [Over-education, under-education and wage premiums on the Hungarian labour market, 1994-2002]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(5), pages 449-471.
    4. Maribel Castillo Caicedo, 2007. "Desajuste educativo por regiones en Colombia: ¿competencia por salarios ó por puestos de trabajo?," DOCUMENTOS DE TRABAJO-CIDSE 004096, UNIVERSIDAD DEL VALLE - CIDSE.
    5. Maribel Castillo Caicedo, 2008. "Desajuste Educativo Por Regiones En Colombia: ¿Competencia Por Salarios Ó Por Puestos De Trabajo?," DOCUMENTOS DE TRABAJO-CIDSE 004499, UNIVERSIDAD DEL VALLE - CIDSE.

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