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Delayed Graduation and Overeducation: A Test of the Human Capital Model versus the Screening Hypothesis

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  • Aina, Carmen

    ()
    (University of Piemonte Orientale)

  • Pastore, Francesco

    ()
    (University of Naples II)

Abstract

The academic circles are devoting a growing interest to delayed graduation and overeducation, but none has analyzed the joint consequences of these two phenomena. Thus, this paper studies the link between graduation not within the minimum period and overeducation, and the effects of these variables on wages, using the ISFOL-Plus data. According to the human capital model, delayed graduation increases a student' human capital and should, therefore, reduce her probability of being overeducated, while increasing her wage. According to the screening hypothesis, instead, delayed graduation signals low skills and therefore increases the chances of being overeducated, while bearing a wage penalty. The evidence lines towards predictions based on the screening hypothesis. First, delayed graduation increases the chances of overeducation. In addition, the direct wage penalty associated to delayed graduation equals 7% of the median wage. However, being a determinant of overeducation, it also indirectly contributes to the penalty of 19.8% of the median wage associated to overeducation. These effects are sizeable, considering the very low returns to higher education in Italy reported in previous studies.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6413.

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Length: 30 pages
Date of creation: Mar 2012
Date of revision:
Handle: RePEc:iza:izadps:dp6413

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Related research

Keywords: university-to-work transition; delayed graduation; overeducation; human capital theory; screening hypothesis; earnings equations; Italy;

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References

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  1. Sascha O. Becker, 2005. "Introducing Time-to-Educate in a Job Search Model," CESifo Working Paper Series 1584, CESifo Group Munich.
  2. Brodaty, Thomas & Gary-Bobo, Robert J. & Prieto, Ana, 2008. "Does Speed Signal Ability? The Impact of Grade Repetitions on Employment and Wages," CEPR Discussion Papers, C.E.P.R. Discussion Papers 6832, C.E.P.R. Discussion Papers.
  3. Carmen Aina & Lorenzo Cappellari & Marco Francesconi, 2010. "Student Performance may not Improve when Universities are Choosier," CESifo Working Paper Series 3264, CESifo Group Munich.
  4. Francesco Pastore & Lia Ambrosio, 2003. "XVIII AIEL Conference," Economics Bulletin, AccessEcon, vol. 28(25), pages A25.
  5. Daniele Checchi & Luca Flabbi, 2013. "Intergenerational Mobility and Schooling Decisions in Germany and Italy: The Impact of Secondary School Tracks," Rivista di Politica Economica, SIPI Spa, SIPI Spa, issue 3, pages 7-57, July-Sept.
  6. Carmen Aina, 2010. "The Determinants of Success and Failure of Italian University Students. Evidence from administrative data," Working Papers, SEMEQ Department - Faculty of Economics - University of Eastern Piedmont 131, SEMEQ Department - Faculty of Economics - University of Eastern Piedmont.
  7. Carmen Aina, 2010. "The Determinants of Educational Attainment, University Drop-out and Time-to-Degree. A focus on Italy," Working Papers, SEMEQ Department - Faculty of Economics - University of Eastern Piedmont 132, SEMEQ Department - Faculty of Economics - University of Eastern Piedmont.
  8. repec:ebl:ecbull:v:28:y:2003:i:25:p:a25 is not listed on IDEAS
  9. John Bound & Michael F. Lovenheim & Sarah Turner, 2012. "Increasing Time to Baccalaureate Degree in the United States," Education Finance and Policy, MIT Press, vol. 7(4), pages 375-424, September.
  10. Lorenzo Cappellari, 2004. "The Effects Of High School Choices On Academic Performance And Early Labour Market Outcomes," Royal Economic Society Annual Conference 2004, Royal Economic Society 92, Royal Economic Society.
  11. Giorgia Casalone & Carmen Aina, 2011. "Does time-to-degree matter? The effect of delayed graduation on employment and wages," Working Papers, AlmaLaurea Inter-University Consortium 38, AlmaLaurea Inter-University Consortium.
  12. Häkkinen, Iida & Uusitalo, Roope, 2003. "The Effect of a Student Aid Reform on Graduation: A Duration Analysis," Working Paper Series, Uppsala University, Department of Economics 2003:8, Uppsala University, Department of Economics.
  13. Monks, James, 1997. "The impact of college timing on earnings," Economics of Education Review, Elsevier, Elsevier, vol. 16(4), pages 419-423, October.
  14. Floro Ernesto Caroleo & Francesco Pastore, 2012. "Talking about the Pigou paradox: Socio-educational background and educational outcomes of AlmaLaurea," International Journal of Manpower, Emerald Group Publishing, Emerald Group Publishing, vol. 33(1), pages 27-50, June.
  15. Carmen Aina & Eliana Baici & Giorgia Casalone, 2011. "Time to degree: students' abilities, university characteristics or something else? Evidence from Italy," Education Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 19(3), pages 311-325.
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Citations

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Cited by:
  1. Floro Ernesto Caroleo & Francesco Pastore, 2012. "Overeducation at a glance. Determinants and wage effects of the educational mismatch, looking at the AlmaLaurea data," Discussion Papers, CRISEI, University of Naples "Parthenope", Italy 18_2012, CRISEI, University of Naples "Parthenope", Italy.
  2. Domadenik, Polona & Farčnik, DaÅ¡a & Pastore, Francesco, 2013. "Horizontal Mismatch in the Labour Market of Graduates: The Role of Signalling," IZA Discussion Papers 7527, Institute for the Study of Labor (IZA).
  3. L. Cattani & G. Guidetti & G. Pedrini, 2014. "Assessing the incidence and wage effects of overeducation among Italian graduates using a new measure for educational requirements," Working Papers wp939, Dipartimento Scienze Economiche, Universita' di Bologna.
  4. Floro Ernesto Caroleo & Francesco Pastore, 2012. "Talking about the Pigou paradox: Socio-educational background and educational outcomes of AlmaLaurea," International Journal of Manpower, Emerald Group Publishing, Emerald Group Publishing, vol. 33(1), pages 27-50, June.

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