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Objective overeducation and worker well-being: a shadow price approach

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Author Info
D. VERHAEST ()
E. OMEY
Abstract

This paper examines, for a sample of Flemish school leavers, the relation between objective over-education and job satisfaction by applying a shadow price approach. We differentiate between direct effects of overeducation and indirect effects via other job characteristics that are associated with overeducation. Additional fixed-effects estimates are executed to account for individual heterogeneity. The utility consequences of overeducation are found to be large and cannot be compensated by a reasonable wage increase at the start of the first employment. These outcomes suggest that, at labour market entry, overeducation is largely involuntary, and is likely to induce negative productivity costs. The negative consequences of overeducation are also found to dimi-nish with years of work experience.

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Publisher Info
Paper provided by Ghent University, Faculty of Economics and Business Administration in its series Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium with number 08/514.

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Length: 32 pages
Date of creation: Apr 2008
Date of revision:
Handle: RePEc:rug:rugwps:08/514

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Related research
Keywords: overeducation; mismatch; underemployment; job satisfaction; well-being; shadow price;

Other versions of this item:

Find related papers by JEL classification:
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy

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  1. Cohn, Elchanan & Ng, Ying Chu, 2000. "Incidence and wage effects of overschooling and underschooling in Hong Kong," Economics of Education Review, Elsevier, vol. 19(2), pages 159-168, April. [Downloadable!] (restricted)
  2. Clark, Andrew E. & Oswald, Andrew J., 1996. "Satisfaction and comparison income," Journal of Public Economics, Elsevier, vol. 61(3), pages 359-381, September. [Downloadable!] (restricted)
    Other versions:
  3. Khan, Linda J. & Morrow, Paula C., 1991. "Objective and subjective underemployment relationships to job satisfaction," Journal of Business Research, Elsevier, vol. 22(3), pages 211-218, May. [Downloadable!] (restricted)
  4. Ada Ferrer-i-Carbonell & Paul Frijters, 2004. "How Important is Methodology for the estimates of the determinants of Happiness?," Economic Journal, Royal Economic Society, vol. 114(497), pages 641-659, 07. [Downloadable!] (restricted)
    Other versions:
  5. Hersch, Joni, 1991. "Education Match and Job Match," The Review of Economics and Statistics, MIT Press, vol. 73(1), pages 140-44, February. [Downloadable!] (restricted)
  6. van Praag, B. M. S. & Frijters, P. & Ferrer-i-Carbonell, A., 2003. "The anatomy of subjective well-being," Journal of Economic Behavior & Organization, Elsevier, vol. 51(1), pages 29-49, May. [Downloadable!] (restricted)
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  7. Freeman, Richard B, 1978. "Job Satisfaction as an Economic Variable," American Economic Review, American Economic Association, vol. 68(2), pages 135-41, May. [Downloadable!] (restricted)
    Other versions:
  8. Vieira, José A. Cabral, 2005. "Skill mismatches and job satisfaction," Economics Letters, Elsevier, vol. 89(1), pages 39-47, October. [Downloadable!] (restricted)
  9. Buchel, Felix, 2002. "The effects of overeducation on productivity in Germany -- the firms' viewpoint," Economics of Education Review, Elsevier, vol. 21(3), pages 263-275, June. [Downloadable!] (restricted)
  10. Ada Ferrer-i-Carbonell & Bernard M.S. van Praag, 2002. "The Subjective Costs of Health Losses due to Chronic Diseases," Tinbergen Institute Discussion Papers 02-023/3, Tinbergen Institute. [Downloadable!]
  11. Allen, Jim & van der Velden, Rolf, 2001. "Educational Mismatches versus Skill Mismatches: Effects on Wages, Job Satisfaction, and On-the-Job Search," Oxford Economic Papers, Oxford University Press, vol. 53(3), pages 434-52, July.
  12. Clark, Andrew E. & Oswald, Andrew J., 1998. "Comparison-concave utility and following behaviour in social and economic settings," Journal of Public Economics, Elsevier, vol. 70(1), pages 133-155, October. [Downloadable!] (restricted)
  13. D. Verhaest & E. Omey, 2004. "What determines measured overeducation?," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 04/216, Ghent University, Faculty of Economics and Business Administration. [Downloadable!]
  14. Tsang, Mun C. & Levin, Henry M., 1985. "The economics of overeducation," Economics of Education Review, Elsevier, vol. 4(2), pages 93-104, April. [Downloadable!] (restricted)
  15. Sicherman, Nachum & Galor, Oded, 1990. "A Theory of Career Mobility," Journal of Political Economy, University of Chicago Press, vol. 98(1), pages 169-92, February. [Downloadable!] (restricted)
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  16. Clark, Andrew E & Oswald, Andrew J, 1994. "Unhappiness and Unemployment," Economic Journal, Royal Economic Society, vol. 104(424), pages 648-59, May. [Downloadable!] (restricted)
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