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The Causal Effect of Overqualification on Earnings : Evidence from a Bayesian Approach

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Author Info
Markus Jochmann () (Department of Economics, University of Konstanz)
Winfried Pohlmeier () (Department of Economics, University of Konstanz)

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Abstract

This paper focuses on the causal effect of overqualification on earnings. Although the issue of overqualification has recently been addressed by quite a huge body of literature there are only few studies examining the causal effect of overqualification on earnings in the sense of Rubins potential outcome approach. Since for non-experimental data settings the incident of overqualification is not a random event, ignoring selfselection into overqualification leads to a misinterpretation of the empirical results and misleading policy conclusions, since the effect of overqualification on earnings cannot be interpreted causally. Using a cross-section of 1188 workers from the GSOEP we apply a Bayesian approach based on Markov chain Monte Carlo methods to estimate various treatment effects of overqualification on earnings. Our findings seriously question results ignoring selectivity effects and point out that on average for the overeducated an appropriate job match would not lead to higher earnings.

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Publisher Info
Paper provided by Research Group Heterogeneous Labor, University of Konstanz/ZEW Mannheim in its series Working Papers of the Research Group Heterogenous Labor with number 04-06.

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Length: 22 pages
Date of creation: 04 Mar 2004
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Handle: RePEc:knz:hetero:0406

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Postal: D-78457 Konstanz
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Related research
Keywords: returns to schooling ; overqualification ; potential outcome approach ; latent index selection model ; Markoc chain Monte Carlo;

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Find related papers by JEL classification:
C24 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Truncated and Censored Models
C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: General - - - Statistical Simulation Methods
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

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  1. Thomas K. Bauer, 1999. "Educational Mismatch and Wages in Germany," IZA Discussion Papers 87, Institute for the Study of Labor (IZA). [Downloadable!]
  2. Heckman, James J & Ichimura, Hidehiko & Todd, Petra, 1998. "Matching as an Econometric Evaluation Estimator," Review of Economic Studies, Blackwell Publishing, vol. 65(2), pages 261-94, April. [Downloadable!] (restricted)
  3. Imbens, Guido W & Angrist, Joshua D, 1994. "Identification and Estimation of Local Average Treatment Effects," Econometrica, Econometric Society, vol. 62(2), pages 467-75, March. [Downloadable!] (restricted)
    Other versions:
  4. Arild Aakvik & James J. Heckman & Edward J. Vytlacil, 2000. "Treatment Effects for Discrete Outcomes when Responses to Treatment Vary Among Observationally Identical Persons: An Application to Norwegian ..," NBER Technical Working Papers 0262, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  5. 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. [Downloadable!] (restricted)
  6. Chib, Siddhartha & Hamilton, Barton H., 2000. "Bayesian analysis of cross-section and clustered data treatment models," Journal of Econometrics, Elsevier, vol. 97(1), pages 25-50, July. [Downloadable!] (restricted)
  7. Wolfgang Franz & Joachim Inkmann & Winfried Pohlmeier & Volker Zimmermann, 2000. "Young and Out in Germany (On Youths? Chances of Labor Market Entrance in Germany)," NBER Chapters, in: Youth Employment and Joblessness in Advanced Countries, pages 381-426 National Bureau of Economic Research, Inc. [Downloadable!]
  8. SOEP Group, 2001. "The German Socio-Economic Panel (GSOEP) after More than 15 Years: Overview," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 70(1), pages 7-14.
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