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Causal Effects of Educational Mismatch in the Labor Market

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  • Kleibrink, Jan

Abstract

This 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.

Suggested Citation

  • Kleibrink, Jan, 2013. "Causal Effects of Educational Mismatch in the Labor Market," Ruhr Economic Papers 421, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    • Handle: RePEc:zbw:rwirep:421
    DOI: 10.4419/86788477
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    References listed on IDEAS

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    Citations

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    Cited by:

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    2. Schwientek, Caroline, 2016. "Are immigrants overeducated in Germany? Determinants and wage effects of educational mismatch," FAU Discussion Papers in Economics 07/2016, Friedrich-Alexander University Erlangen-Nuremberg, Institute for Economics.
    3. Merve Cim & Michael Kind & Jan Kleibrink, 2020. "Occupational mismatch of immigrants in Europe: the role of education and cognitive skills," Education Economics, Taylor & Francis Journals, vol. 28(1), pages 96-112, January.
    4. Jan Kleibrink, 2014. "Sick of Your Job?: Negative Health Effects from Non-optimal Employment," SOEPpapers on Multidisciplinary Panel Data Research 718, DIW Berlin, The German Socio-Economic Panel (SOEP).
    5. Jan Kleibrink, 2014. "Sick of your Job? – Negative Health Effects from Non-Optimal Employment," Ruhr Economic Papers 0514, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
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    More about this item

    Keywords

    wages; educational mismatch;

    JEL classification:

    • 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

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