Overeducation, Undereducation, and the Theory of Career Mobility
AbstractThe 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.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 195.
Length: 38 pages
Date of creation: Sep 2000
Date of revision:
Publication status: published in: Applied Economics, 2004, 36 (8), 803 - 816
Contact details of provider:
Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org
Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Find related papers by JEL classification:
- J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
- 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
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.:
- 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.
- Groeneveld, Sandra & Hartog, Joop, 2004.
"Overeducation, wages and promotions within the firm,"
Elsevier, vol. 11(6), pages 701-714, December.
- Groeneveld, Sandra & Hartog, Joop, 2003. "Overeducation, Wages and Promotions within the Firm," IZA Discussion Papers 883, Institute for the Study of Labor (IZA).
- Luiz Alberto Esteves, 2007.
"Incompatibilidade Escolaridade-Ocupação e Salários: Evidências de uma Empresa Industrial Brasileira,"
0059, Universidade Federal do Paraná, Department of Economics.
- Luiz Alberto Esteves, 2009. "Incompatibilidade Escolaridade-Ocupação e Salários: Evidências de uma Empresa Industrial Brasileira," Revista Brasileira de Economia, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil), vol. 63(2), pages 77-90, June.
- 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.
- 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.
- 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.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak).
If references are entirely missing, you can add them using this form.