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The Effect of Overskilling Dynamics on Wages

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Author Info

  • Mavromaras, Kostas G.

    ()
    (NILS, Flinders University)

  • Mahuteau, Stéphane

    ()
    (NILS, Flinders University)

  • Sloane, Peter J.

    ()
    (Swansea University)

  • Wei, Zhang

    ()
    (NILS, Flinders University)

Abstract

We use a random effects dynamic probit model to estimate the effect of overskilling dynamics on wages. We find that overskilling mismatch is common and more likely among those who have been overskilled in the past. It is also highly persistent, in a manner that is inversely related to educational level. Yet, the wages of university graduates are reduced more by past overskilling, than for any other education level. A possible reason for this wage effect is that graduates tend to be in better-paid jobs and therefore there is more at stake for them if they get it wrong.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6985.

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Length: 37 pages
Date of creation: Nov 2012
Date of revision:
Publication status: published in: Education Economics, 2013, 21 (3), 281-303
Handle: RePEc:iza:izadps:dp6985

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Keywords: panel dynamic estimation; mismatch; overskilling; wages;

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  1. Jeffrey M. Wooldridge, 2005. "Simple solutions to the initial conditions problem in dynamic, nonlinear panel data models with unobserved heterogeneity," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(1), pages 39-54.
  2. Bell, David N.F. & Blanchflower, David G., 2010. "Youth Unemployment: Déjà Vu?," IZA Discussion Papers 4705, Institute for the Study of Labor (IZA).
  3. Mavromaras, Kostas G. & McGuinness, Seamus & Fok, Yin King, 2009. "Overskilling Dynamics and Education Pathways," IZA Discussion Papers 4321, Institute for the Study of Labor (IZA).
  4. Mavromaras, Kostas G. & McGuinness, Seamus & O'Leary, Nigel C. & Sloane, Peter J. & Fok, Yin King, 2007. "The Problem of Overskilling in Australia and Britain," IZA Discussion Papers 3136, Institute for the Study of Labor (IZA).
  5. Arulampalam, Wiji & Stewart, Mark, 2007. "Simplified Implementation of the Heckman Estimator of the Dynamic Probit Model and a Comparison with Alternative Estimators," IZA Discussion Papers 3039, Institute for the Study of Labor (IZA).
  6. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
  7. Mavromaras, Kostas G. & McGuinness, Seamus & Fok, Yin King, 2007. "Assessing the Incidence and Wage Effects of Over-Skilling in the Australian Labour Market," IZA Discussion Papers 2837, Institute for the Study of Labor (IZA).
  8. Kostas Mavromaras & Peter Sloane & Zhang Wei, 2012. "The role of education pathways in the relationship between job mismatch, wages and job satisfaction: a panel estimation approach," Education Economics, Taylor & Francis Journals, vol. 20(3), pages 303-321, February.
  9. Mavromaras, Kostas & McGuinness, Seamus & O?Leary, Nigel & Sloane, Peter & Fok, Yin King, 2009. "Job Mismatches and Labour Market Outcomes," Papers WP314, Economic and Social Research Institute (ESRI).
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