Nash Bargaining and the Wage Consequences of Educational Mismatches
AbstractThe paper provides a theoretical foundation for the empirical regularities observed in estimations of wage consequences of overeducation and undereducation. Workers with more education than required for their jobs are observed to suffer wage penalties relative to workers with the same education in jobs that only require their educational level. Similarly, workers with less education than required for their jobs earn wage rewards. These departures from the Mincer human capital earnings function can be explained by Nash bargaining between workers and employers. Under fairly mild assumptions, Nash bargaining predicts a wage penalty for overeducation and a wage reward for undereducation, and further predicts that the wage penalty will exceed the wage reward. This paper reviews the established empirical regularities and then provides Nash bargaining results that explain these regularities.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7025.
Length: 12 pages
Date of creation: Nov 2012
Date of revision:
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Other versions of this item:
- Sattinger, Michael & Hartog, Joop, 2013. "Nash bargaining and the wage consequences of educational mismatches," Labour Economics, Elsevier, vol. 23(C), pages 50-56.
- Joop Hartog & Michael Sattinger, 2012. "Nash Bargaining and the Wage Consequences of Educational Mismatches," Tinbergen Institute Discussion Papers 12-129/V, Tinbergen Institute.
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
- C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-12-22 (All new papers)
- NEP-HRM-2012-12-22 (Human Capital & Human Resource Management)
- NEP-LAB-2012-12-22 (Labour Economics)
- NEP-LMA-2012-12-22 (Labor Markets - Supply, Demand, & Wages)
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.:
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