IDEAS home Printed from https://ideas.repec.org/p/mlb/wpaper/940.html
   My bibliography  Save this paper

Causes of Overeducation in the Australian Labour Market

Author

Listed:
  • Ingrid Linsley

Abstract

Overeducation is a form of labour underutilisation which occurs when the formal education level of a worker exceeds that which is required for the job. In Australia close to 30 per cent of workers are overeducated and are underutilising their skills. Using data from the Negotiating the Life Course survey, this study determines the causes of overeducation in Australia. Four of the key theories that have been used to explain overeducation are tested: human capital, job competition, assignment and the career mobility theories. Tests show that the job competition model best explains the existence of overeducation in the Australian labour market.

Suggested Citation

  • Ingrid Linsley, 2005. "Causes of Overeducation in the Australian Labour Market," Department of Economics - Working Papers Series 940, The University of Melbourne.
    • Handle: RePEc:mlb:wpaper:940
    as

    Download full text from publisher

    File URL: http://www.economics.unimelb.edu.au/downloads/wpapers-05/940.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Hartog, Joop, 2000. "Over-education and earnings: where are we, where should we go?," Economics of Education Review, Elsevier, vol. 19(2), pages 131-147, April.
    2. Duncan, Greg J. & Hoffman, Saul D., 1981. "The incidence and wage effects of overeducation," Economics of Education Review, Elsevier, vol. 1(1), pages 75-86, February.
    3. 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.
    4. Sattinger, Michael, 1993. "Assignment Models of the Distribution of Earnings," Journal of Economic Literature, American Economic Association, vol. 31(2), pages 831-880, June.
    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. Parvinder Kler, 2005. "Graduate overeducation in Australia: A comparison of the mean and objective methods," Education Economics, Taylor & Francis Journals, vol. 13(1), pages 47-72.
    8. P. J. Sloane & H. Battu & P. T. Seaman, 1999. "Overeducation, undereducation and the British labour market," Applied Economics, Taylor & Francis Journals, vol. 31(11), pages 1437-1453.
    9. Ingrid Linsley, 2005. "Overeducation in the Australian Labour Market : Its Incidence and Effects," Department of Economics - Working Papers Series 939, The University of Melbourne.
    10. Frank, Robert H, 1978. "Why Women Earn Less: The Theory and Estimation of Differential Overqualification," American Economic Review, American Economic Association, vol. 68(3), pages 360-373, June.
    11. Sicherman, Nachum, 1991. ""Overeducation" in the Labor Market," Journal of Labor Economics, University of Chicago Press, vol. 9(2), pages 101-122, April.
    12. 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.
    13. Hartog, Joop, 1986. "Allocation and the Earnings Function," Empirical Economics, Springer, vol. 11(2), pages 97-110.
    14. Mendes de Oliveira, M. & Santos, M. C. & Kiker, B. F., 2000. "The role of human capital and technological change in overeducation," Economics of Education Review, Elsevier, vol. 19(2), pages 199-206, April.
    15. Arnaud Chevalier, 2003. "Measuring Over-education," Economica, London School of Economics and Political Science, vol. 70(279), pages 509-531, August.
    16. Hersch, Joni, 1991. "Education Match and Job Match," The Review of Economics and Statistics, MIT Press, vol. 73(1), pages 140-144, February.
    17. Tsang, Mun C. & Levin, Henry M., 1985. "The economics of overeducation," Economics of Education Review, Elsevier, vol. 4(2), pages 93-104, April.
    18. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 87(3), pages 355-374.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Giuseppe Croce & Emanuela Ghignoni, 2011. "Overeducation and spatial flexibility in Italian local labour markets," Working Papers in Public Economics 145, University of Rome La Sapienza, Department of Economics and Law.
    2. Massimiliano Tani & Christopher Heaton & Gavin Chan, 2013. "The Wage Premium of Foreign Education: New Evidence from Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 46(4), pages 395-404, December.
    3. Dai Binh Tran & Sasiwimon Warunsiri Paweenawat, 2023. "The returns to education and wage penalty from overeducation: New evidence from Vietnam," Bulletin of Economic Research, Wiley Blackwell, vol. 75(4), pages 1267-1290, October.
    4. Wen, Le & Maani, Sholeh A. & Dong, Zhi, 2023. "Educational Job Mismatch, Job Satisfaction, On-the-Job Training, and Employee Quit Behavior: A Dynamic Analytical Approach," IZA Discussion Papers 15869, Institute of Labor Economics (IZA).
    5. Mohammed Alzubaidi, 2020. "The impact of overeducation on job outcomes: Evidence from Saudi Arabia," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 9(4), pages 104-120, July.
    6. Seamus McGuinness & Mark Wooden, 2007. "Overskilling, Job Insecurity and Career Mobility: Evidence from Australia," Melbourne Institute Working Paper Series wp2007n09, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    7. Ingrid Linsley, 2005. "Causes of Overeducation in the Australian Labour Market," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 8(2), pages 121-143, June.
    8. Jian Z. Yeo & Sholeh A. Maani, 2017. "Educational mismatches and earnings in the New Zealand labour market," New Zealand Economic Papers, Taylor & Francis Journals, vol. 51(1), pages 28-48, January.
    9. Carroll, David & Tani, Massimiliano, 2013. "Over-education of recent higher education graduates: New Australian panel evidence," Economics of Education Review, Elsevier, vol. 32(C), pages 207-218.
    10. Kostas Mavromaras & Seamus Mcguinness & Yin King Fok, 2009. "Assessing the Incidence and Wage Effects of Overskilling in the Australian Labour Market," The Economic Record, The Economic Society of Australia, vol. 85(268), pages 60-72, March.
    11. Kitae Sohn, 2010. "The Role of Cognitive and Noncognitive Skills in Overeducation," Journal of Labor Research, Springer, vol. 31(2), pages 124-145, June.
    12. Ferreira Sequeda, Maria & Künn, Annemarie & de Grip, Andries, 2016. "Work-related learning and skill development in Europe: Does initial skill mismatch matter?," Research Memorandum 027, Maastricht University, Graduate School of Business and Economics (GSBE).
    13. Mañé Vernet, Ferran & Miravet, Daniel, 2010. "Sobreeducación y Sobrecualificación en los Universitarios Catalanes. Una perspectiva de género," Working Papers 2072/179592, Universitat Rovira i Virgili, Department of Economics.
    14. Antonios Maragakis & Andy van den Dobbelsteen & Alexandros Maragakis, 2016. "Validating the Need to Include the Economic Returns of Graduates as a Metric of a Higher Education Institutions Level of Sustainability," International Journal of Higher Education, Sciedu Press, vol. 5(4), pages 237-237, November.
    15. Tani, Massimiliano, 2012. "Does Immigration Policy Affect the Education-Occupation Mismatch? Evidence from Australia," IZA Discussion Papers 6937, Institute of Labor Economics (IZA).
    16. Tsai, Yuping, 2010. "Returns to overeducation: A longitudinal analysis of the U.S. labor market," Economics of Education Review, Elsevier, vol. 29(4), pages 606-617, August.
    17. David Carroll & Massimiliano Tani, 2015. "Job search as a determinant of graduate over-education: evidence from Australia," Education Economics, Taylor & Francis Journals, vol. 23(5), pages 631-644, October.
    18. Christiana Charalambidou & Steven McIntosh, 2021. "Over‐education in Cyprus: Micro and macro determinants, persistence and state dependence. A dynamic panel analysis," Manchester School, University of Manchester, vol. 89(2), pages 172-189, March.
    19. Wen, Le & Maani, Sholeh A., 2023. "Earnings Penalty of Educational Mismatch: A Comparison of Alternative Methods of Assessing Over-Education," IZA Discussion Papers 15943, Institute of Labor Economics (IZA).
    20. Antonios Maragakis & Andy van den Dobbelsteen & Alexandros Maragakis, 2016. "Stakeholders Perceptions of a Universal Sustainability Assessment in Higher Education - A Review of Empirical Evidence," International Journal of Higher Education, Sciedu Press, vol. 5(4), pages 247-247, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ingrid Linsley, 2005. "Overeducation in the Australian Labour Market : Its Incidence and Effects," Department of Economics - Working Papers Series 939, The University of Melbourne.
    2. Kampelmann, Stephan & Rycx, François, 2012. "The impact of educational mismatch on firm productivity: Evidence from linked panel data," Economics of Education Review, Elsevier, vol. 31(6), pages 918-931.
    3. repec:kap:iaecre:v:11:y:2005:i:1:p:93-109 is not listed on IDEAS
    4. Jian Z. Yeo & Sholeh A. Maani, 2017. "Educational mismatches and earnings in the New Zealand labour market," New Zealand Economic Papers, Taylor & Francis Journals, vol. 51(1), pages 28-48, January.
    5. Fatma El-Hamidi, 2009. "Education-Occupation Mismatch and the Effect on Wages of Egyptian Workers," Working Papers 474, Economic Research Forum, revised Mar 2009.
    6. Ingrid Linsley, 2005. "Causes of Overeducation in the Australian Labour Market," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 8(2), pages 121-143, June.
    7. Kiersztyn, Anna, 2013. "Stuck in a mismatch? The persistence of overeducation during twenty years of the post-communist transition in Poland," Economics of Education Review, Elsevier, vol. 32(C), pages 78-91.
    8. Inmaculada Garc�a-Mainar & V�ctor M. Montuenga-G�mez, 2017. "Subjective educational mismatch and signalling in Spain," Documentos de Trabajo dt2017-03, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.
    9. Léné, Alexandre, 2011. "Occupational downgrading and bumping down: The combined effects of education and experience," Labour Economics, Elsevier, vol. 18(2), pages 257-269, April.
    10. L. Cattani & G. Guidetti & G. Pedrini, 2014. "Assessing the incidence and wage effects of overeducation among Italian graduates using a new measure for educational requirements," Working Papers wp939, Dipartimento Scienze Economiche, Universita' di Bologna.
    11. 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.
    12. Hung, Chia-Yu, 2008. "Overeducation and undereducation in Taiwan," Journal of Asian Economics, Elsevier, vol. 19(2), pages 125-137, April.
    13. Carroll, David & Tani, Massimiliano, 2013. "Over-education of recent higher education graduates: New Australian panel evidence," Economics of Education Review, Elsevier, vol. 32(C), pages 207-218.
    14. Iñaki Iriondo & Teodosio Pérez-Amaral, 2013. "The Effect of Educational Mismatch on Wages Using European Panel Data," Working Papers 700, Queen Mary University of London, School of Economics and Finance.
    15. Joanne Lindley & Steven McIntosh, 2010. "Is the Over-Education Wage Penalty Permanent?," Working Papers 2010004, The University of Sheffield, Department of Economics, revised Jan 2010.
    16. Barbara Ermini & Luca Papi & Francesca Scaturro, 2017. "An Analysis of the Determinants of Over-Education Among Italian Ph.D Graduates," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 3(2), pages 167-207, July.
    17. Araújo, Isabel & Carneiro, Anabela, 2020. "Educational Mismatches of Newly Hired Workers: Short and Medium-run Effects on Wages," GLO Discussion Paper Series 668, Global Labor Organization (GLO).
    18. Oliver Fabel & Razvan Pascalau, 2013. "Recruitment of Seemingly Overeducated Personnel: Insider--Outsider Effects on Fair Employee Selection Practices," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 20(1), pages 57-82, February.
    19. Sara Flisi & Valentina Goglio & Elena Claudia Meroni & Margarida Rodrigues & Esperanza Vera-Toscano, 2017. "Measuring Occupational Mismatch: Overeducation and Overskill in Europe—Evidence from PIAAC," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 131(3), pages 1211-1249, April.
    20. Baktash, Mehrzad B., 2023. "Overeducation, Performance Pay and Wages: Evidence from Germany," GLO Discussion Paper Series 1327, Global Labor Organization (GLO).
    21. Galasi, Péter, 2004. "Túlképzés, alulképzés és bérhozam a magyar munkaerőpiacon, 1994-2002 [Over-education, under-education and wage premiums on the Hungarian labour market, 1994-2002]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(5), pages 449-471.

    More about this item

    Keywords

    Overeducation; labour market; human capital theory; career mobility;
    All these keywords.

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mlb:wpaper:940. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Dandapani Lokanathan (email available below). General contact details of provider: https://edirc.repec.org/data/demelau.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.