Causal Effects of Educational Mismatch in the Labor Market
AbstractThis paper analyzes the effect of educational mismatch on wages in Germany, using data from the German Socio-Economic Panel. Educational mismatch has been discussed extensively, mostly by applying OLS wage regressions which are prone to an unobserved heterogeneity bias. This problem is approached by using FE and IV models. As a stability check, the regressions are rerun using data from the International Adult Literacy Survey, allowing for an explicit control of skills as proxy of abilities. Results show that unobserved heterogeneity does not explain the wage differences between actual years of education and years of required education. This rejects the hypothesis that mismatched workers compensate for heterogeneity in innate abilities. The results suggest a structural problem in the German educational system as skill demand and supply are not in long-term equilibrium.
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Bibliographic InfoPaper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen in its series Ruhr Economic Papers with number 0421.
Length: 27 pages
Date of creation: Jul 2013
Date of revision:
Other versions of this item:
- 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).
- I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
- I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-07-15 (All new papers)
- NEP-EDU-2013-07-15 (Education)
- NEP-EUR-2013-07-15 (Microeconomic European Issues)
- NEP-LAB-2013-07-15 (Labour Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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