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Overeducation, Wages and Promotions within the Firm

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Author Info

  • Groeneveld, Sandra

    ()
    (Erasmus University Rotterdam)

  • Hartog, Joop

    ()
    (University of Amsterdam)

Abstract

We analyse data from personnel records of a large firm producing energy and telecommunication and test for the effect of deviations between required and attained education of workers. Required education is measured as hiring standards set by the firm. We find the usual effects of over- and undereducation in a wage regression, thus rejecting the argument that such effects are exclusively due to firm fixed effects. Distinguishing, within the firm, between a sheltered internal labour market and an exposed external labour market, we find that at the internal labour market over- and undereducation significantly affect career development, in particular at younger ages, but that such effects are mostly absent at the firm’s external labour market.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 883.

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Length: 23 pages
Date of creation: Oct 2003
Date of revision:
Publication status: published in: Labour Economics, 2004, 11 (6), 701-714
Handle: RePEc:iza:izadps:dp883

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Keywords: career mobility; wages; overeducation; education; promotions;

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References

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  1. Sicherman, Nachum, 1991. ""Overeducation" in the Labor Market," Journal of Labor Economics, University of Chicago Press, vol. 9(2), pages 101-22, April.
  2. Gibbons, Robert & Waldman, Michael, 1999. "Careers in organizations: Theory and evidence," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 36, pages 2373-2437 Elsevier.
  3. Büchel, Felix & Mertens, Antje, 2000. "Overeducation, Undereducation, and the Theory of Career Mobility," IZA Discussion Papers 195, Institute for the Study of Labor (IZA).
  4. Berg, Gerard J. van den & Gautier, Pieter A. & Ours, Jan C., 1998. "Worker turnover at the firm level and crowding out of lower educated workers," Serie Research Memoranda 0049, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
  5. John Robst, 1995. "Career Mobility, Job Match, and Overeducation," Eastern Economic Journal, Eastern Economic Association, vol. 21(4), pages 539-550, Fall.
  6. Dolton, Peter & Vignoles, Anna, 2000. "The incidence and effects of overeducation in the U.K. graduate labour market," Economics of Education Review, Elsevier, vol. 19(2), pages 179-198, April.
  7. Daly, Mary C. & Buchel, Felix & Duncan, Greg J., 2000. "Premiums and penalties for surplus and deficit education: Evidence from the United States and Germany," Economics of Education Review, Elsevier, vol. 19(2), pages 169-178, April.
  8. Groot, Wim & Maassen van den Brink, Henriette, 2000. "Overeducation in the labor market: a meta-analysis," Economics of Education Review, Elsevier, vol. 19(2), pages 149-158, April.
  9. Hartog, Joop & Oosterbeek, Hessel, 1988. "Education, allocation and earnings in the Netherlands: 0verschooling?," Economics of Education Review, Elsevier, vol. 7(2), pages 185-194, April.
  10. Hartog, Joop, 1988. "An Ordered Response Model for Allocation and Earnings," Kyklos, Wiley Blackwell, vol. 41(1), pages 113-41.
  11. Alfonso Alba-Ramírez, 1993. "Mismatch in the Spanish Labor Market: Overeducation?," Journal of Human Resources, University of Wisconsin Press, vol. 28(2), pages 259-278.
  12. L. Wade, 1988. "Review," Public Choice, Springer, vol. 58(1), pages 99-100, July.
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Citations

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Cited by:
  1. Lamo, Ana & Messina, Julián, 2010. "Formal education, mismatch and wages after transition: Assessing the impact of unobserved heterogeneity using matching estimators," Working Paper Series 1215, European Central Bank.
  2. Luiz Alberto Esteves, 2007. "Incompatibilidade Escolaridade-Ocupação e Salários: Evidências de uma Empresa Industrial Brasileira," Working Papers 0059, Universidade Federal do Paraná, Department of Economics.
  3. Stijn Baert & Bart Cockx & Dieter Verhaest, 2012. "Overeducation at the Start of the Career - Stepping Stone or Trap?," CESifo Working Paper Series 3825, CESifo Group Munich.
  4. Jan Kleibrink, 2013. "Causal Effects of Educational Mismatch in the Labor Market," SOEPpapers on Multidisciplinary Panel Data Research 571, DIW Berlin, The German Socio-Economic Panel (SOEP).
  5. Lourdes Badillo Amador & Angel López Nicolás & Luis E. Vila, 2008. "The Consequences on Job Satisfaction of Job-Worker Educational and Skill Mismatches in the Spanish Labour Market: a Panel Analysis," Working Papers 2008-32, FEDEA.
  6. Belfield, Clive, 2010. "Over-education: What influence does the workplace have?," Economics of Education Review, Elsevier, vol. 29(2), pages 236-245, April.
  7. Verhaest, Dieter & Schatteman, Tom, 2010. "Overeducation in the early career: an analysis using sequence techniques," Working Papers 2010/09, Hogeschool-Universiteit Brussel, Faculteit Economie en Management.
  8. Kitae Sohn, 2010. "The Role of Cognitive and Noncognitive Skills in Overeducation," Journal of Labor Research, Springer, vol. 31(2), pages 124-145, June.
  9. Lindley, Joanne, 2009. "The over-education of UK immigrants and minority ethnic groups: Evidence from the Labour Force Survey," Economics of Education Review, Elsevier, vol. 28(1), pages 80-89, February.
  10. Brynin, Malcolm & Longhi, Simonetta, 2009. "Overqualification: Major or minor mismatch?," Economics of Education Review, Elsevier, vol. 28(1), pages 114-121, February.

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