Overeducation and Individual Heterogeneity
AbstractIn this paper, the efficiency of human capital investments is evaluated in the light of inadequate educational careers and skill obsolescence. Assuming heterogeneous returns to schooling and overeducation we use the potential outcome approach to measure the causal effect of human capital investments on earnings as a continuous treatment effect. Empirical evidence is based on a sample of West German full-time employed males from the "BIBB/IABStrukturerhebung 1998/99". Our estimate of the average treatment effect of an additional year of schooling (ATE) amounts to 8.7%, which does not differ much from conventional instrumental variable estimates. For skilled and high skilled workers, we find no evidence that the average returns to overeducation are lower than the average returns to required educuation, which differs from the evidence find in most traditional studies. There is evidence for considerable heterogeneity in the expected returns to overeducation. For 20 to 30% of the workers returns seem to be negative.
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Bibliographic InfoPaper provided by Research Group Heterogeneous Labor, University of Konstanz/ZEW Mannheim in its series Working Papers of the Research Group Heterogenous Labor with number 03-01.
Length: 25 pages
Date of creation: 23 Apr 2003
Date of revision:
returns to schooling ; overeducation ; potential outcome approach ; conditional mean independence ; correlated random coefficient model;
Find related papers by JEL classification:
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
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