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Assessing the Incidence and Wage Effects of Over-Skilling in the Australian Labour Market

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Author Info

  • Mavromaras, Kostas G.

    ()
    (NILS, Flinders University)

  • McGuinness, Seamus

    ()
    (Economic and Social Research Institute, Dublin)

  • Fok, Yin King

    ()
    (University of Melbourne)

Abstract

This paper examines the incidence and wage effects of over-skilling within the Australian labour market. It finds that approximately 30 percent of employees believed themselves to be moderately over-skilled and 11 percent believed themselves to be severely over-skilled. The incidence of skills mismatch varied little when the sample was split by education. After controlling for individual and job characteristics as well as the potential bias arising from individual unobserved heterogeneity, severely over-skilled workers suffer an average wage penalty of 13.3 percent with the penalty ranging from about 8 percent among vocationally qualified employees to over 20 percent for graduates.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2837.

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Length: 35 pages
Date of creation: Jun 2007
Date of revision:
Publication status: published in: Economic Record, 2009, 85(268), 60-72
Handle: RePEc:iza:izadps:dp2837

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Keywords: education; skills;

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References

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  1. Parvinder Kler, 2005. "Graduate overeducation in Australia: A comparison of the mean and objective methods," Education Economics, Taylor & Francis Journals, vol. 13(1), pages 47-72.
  2. Ingrid Linsley, 2005. "Causes of Overeducation in the Australian Labour Market," Department of Economics - Working Papers Series 940, The University of Melbourne.
  3. Francis Green & Steven McIntosh, 2007. "Is there a genuine under-utilization of skills amongst the over-qualified?," Applied Economics, Taylor & Francis Journals, vol. 39(4), pages 427-439.
  4. Derby Voon & Paul W. Miller, 2005. "Undereducation and Overeducation in the Australian Labour Market," The Economic Record, The Economic Society of Australia, vol. 81(s1), pages S22-S33, 08.
  5. Ingrid Linsley, 2005. "Causes of Overeducation in the Australian Labour Market," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 8(2), pages 121-143, June.
  6. Sattinger, Michael, 1993. "Assignment Models of the Distribution of Earnings," Journal of Economic Literature, American Economic Association, vol. 31(2), pages 831-80, June.
  7. Sascha O. Becker & Andrea Ichino, 2002. "Estimation of average treatment effects based on propensity scores," Stata Journal, StataCorp LP, vol. 2(4), pages 358-377, November.
  8. Séamus McGuinness, 2006. "Overeducation in the Labour Market," Journal of Economic Surveys, Wiley Blackwell, vol. 20(3), pages 387-418, 07.
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Citations

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Cited by:
  1. Piracha, Matloob & Tani, Massimiliano & Vadean, Florin, 2010. "Immigrant Over- and Under-education: The Role of Home Country Labour Market Experience," IZA Discussion Papers 5302, Institute for the Study of Labor (IZA).
  2. McGuinness, Seamus & Sloane, Peter J., 2009. "Labour Market Mismatch Among UK Graduates: An Analysis Using REFLEX Data," IZA Discussion Papers 4168, Institute for the Study of Labor (IZA).
  3. Lamo, Ana & Messina, Julián, 2010. "Formal Education, Mismatch and Wages after Transition: Assessing the Impact of Unobserved Heterogeneity Using Matching Estimators," IZA Discussion Papers 4982, Institute for the Study of Labor (IZA).
  4. Elena B�rcena-Martín & Santiago Budría & Ana I. Moro-Egido, 2012. "Skill mismatches and wages among European university graduates," Applied Economics Letters, Taylor & Francis Journals, vol. 19(15), pages 1471-1475, October.
  5. Kalfa, Eleni & Piracha, Matloob, 2013. "Immigrants' Educational Mismatch and the Penalty of Over-Education," IZA Discussion Papers 7721, Institute for the Study of Labor (IZA).
  6. Mavromaras, Kostas G. & Mahuteau, Stéphane & Sloane, Peter J. & Wei, Zhang, 2012. "The Effect of Overskilling Dynamics on Wages," IZA Discussion Papers 6985, Institute for the Study of Labor (IZA).
  7. Mavromaras, Kostas & McGuinness, Seamus, 2012. "Overskilling dynamics and education pathways," Economics of Education Review, Elsevier, vol. 31(5), pages 619-628.
  8. Mavromaras, Kostas G. & Sloane, Peter J. & Wei, Zhang, 2013. "The Scarring Effects of Unemployment, Low Pay and Skills Under-utilisation in Australia Compared," IZA Discussion Papers 7440, Institute for the Study of Labor (IZA).
  9. Schwalje, Wes, 2011. "Knowledge-based Economic Development as a Unifying Vision in a Post-awakening Arab World," MPRA Paper 30305, University Library of Munich, Germany.
  10. Schwalje, Wes, 2011. "A Conceptual Model of National Skills Formation for Knowledge-based Economic Development," MPRA Paper 30302, University Library of Munich, Germany.
  11. Sánchez-Sánchez, Nuria & McGuinness, Seamus, 2011. "Decomposing the Impacts of Overeducation and Overskilling on Earnings and Job Satisfaction: An Analysis Using REFLEX data," Papers WP393, Economic and Social Research Institute (ESRI).

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