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Does the Choice of Reference Levels of Education Matter in the ORU Earnings Equation?

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  • Chiswick, Barry R.

    ()
    (George Washington University)

  • Miller, Paul W.

    (Curtin University)

Abstract

This paper examines whether the results of the earnings equation developed in the overeducation/required eduation/under-education (ORU) literature are sensitive to whether the usual or reference levels of education are measured using the Realized Matches or Worker Self-Assessment methods. The analyses are conducted for all male native-born and immigrant workers in the US, by level of skill, and by occupation. While point estimates differ, particularly when earnings equations are estimated for the smaller samples of sub-groups of the workforce, the general findings are robust to this measurement issue. Thus, the answers provided to the typical research questions in the ORU literature on the utilization of schooling are independent of the measure of the usual or reference level of education used in the analyses.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4382.

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Length: 32 pages
Date of creation: Aug 2009
Date of revision:
Publication status: published in: Economics of Education Review, 2010, 29 (6), 1076-1085
Handle: RePEc:iza:izadps:dp4382

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Keywords: rates of return; immigrants; skill; schooling; occupations; earnings;

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References

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  1. van der Meer, Peter H., 2006. "The validity of two education requirement measures," Economics of Education Review, Elsevier, Elsevier, vol. 25(2), pages 211-219, April.
  2. Parvinder Kler, 2005. "Graduate overeducation in Australia: A comparison of the mean and objective methods," Education Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 13(1), pages 47-72.
  3. Chiswick, Barry R. & Miller, Paul W., 2008. "Why is the payoff to schooling smaller for immigrants?," Labour Economics, Elsevier, Elsevier, vol. 15(6), pages 1317-1340, December.
  4. Russell W. Rumberger, 1987. "The Impact of Surplus Schooling on Productivity and Earnings," Journal of Human Resources, University of Wisconsin Press, vol. 22(1), pages 24-50.
  5. Richard R. Verdugo & Naomi Turner Verdugo, 1989. "The Impact of Surplus Schooling on Earnings: Some Additional Findings," Journal of Human Resources, University of Wisconsin Press, vol. 24(4), pages 629-643.
  6. Kiker, B. F. & Santos, Maria C. & de Oliveira, M. Mendes, 1997. "Overeducation and undereducation: Evidence for Portugal," Economics of Education Review, Elsevier, Elsevier, vol. 16(2), pages 111-125, April.
  7. Duncan, Greg J. & Hoffman, Saul D., 1981. "The incidence and wage effects of overeducation," Economics of Education Review, Elsevier, Elsevier, vol. 1(1), pages 75-86, February.
  8. Hartog, Joop, 2000. "Over-education and earnings: where are we, where should we go?," Economics of Education Review, Elsevier, Elsevier, vol. 19(2), pages 131-147, April.
  9. Vahey, Shaun P., 2000. "The great Canadian training robbery: evidence on the returns to educational mismatch," Economics of Education Review, Elsevier, Elsevier, vol. 19(2), pages 219-227, April.
  10. Stephen Rubb, 2003. "Post-College Schooling, Overeducation, and Hourly Earnings in the United States," Education Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 11(1), pages 53-72.
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Cited by:
  1. Chiswick, Barry R. & Miller, Paul W., 2009. "Educational Mismatch: Are High-Skilled Immigrants Really Working at High-Skilled Jobs and the Price They Pay If They Aren't?," IZA Discussion Papers 4280, Institute for the Study of Labor (IZA).
  2. Andersson Joona, Pernilla & Datta Gupta, Nabanita & Wadensjö, Eskil, 2012. "Overeducation among Immigrants in Sweden: Incidence, Wage Effects and State-Dependence," IZA Discussion Papers 6695, Institute for the Study of Labor (IZA).
  3. Mariya Aleksynska & Ahmed Tritah, 2011. "Occupation-Education Mismatch of Immigrant Workers in Europe: Context and Policies," Working Papers 2011-16, CEPII research center.
  4. Ren, Weiwei & Miller, Paul W., 2012. "Changes over time in the return to education in urban China: Conventional and ORU estimates," China Economic Review, Elsevier, Elsevier, vol. 23(1), pages 154-169.
  5. Abbi Kedir & Andri Kyrizi & Francisco Martinez-Mora, 2012. "Signalling and Productivity Effects of Overeducation: Is It Really a Waste of Resources?," Discussion Papers in Economics 12/19, Department of Economics, University of Leicester.

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