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Wage penalty of overeducation: New micro-evidence from China

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  • Wu, Na
  • Wang, Qunyong

Abstract

This paper studies the wage penalty of overeducation using the World Bank's STEP (Skills Towards Employability and Productivity) survey in China. Based on the measurements of cognitive, technical, and non-cognitive skills, the overeducated have systematically lower abilities compared with the well-matched, just as the skill heterogeneity theory predicts. Endogenous switching model is adopted to estimate the effect of overeducation on wage. We find that the overeducated workers with tertiary education suffer from significant loss compared with the well-matched workers, while overeducation has no significant effect on workers with high school education. The causality inference using nearest neighbor matching and propensity score weighted regression methods reveals that our conclusions are robust.

Suggested Citation

  • Wu, Na & Wang, Qunyong, 2018. "Wage penalty of overeducation: New micro-evidence from China," China Economic Review, Elsevier, vol. 50(C), pages 206-217.
  • Handle: RePEc:eee:chieco:v:50:y:2018:i:c:p:206-217
    DOI: 10.1016/j.chieco.2018.04.006
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    Cited by:

    1. 岩﨑, 一郎 & 馬, 欣欣, 2019. "現代中国における男女賃金格差: メタ分析による接近," Discussion Paper Series 689, Institute of Economic Research, Hitotsubashi University.
    2. Obbey Ahmed Elamin, 2018. "Impact of Informal Job-search on Wages for University Graduates in Egypt and Jordan," Working Papers 1272, Economic Research Forum, revised 19 Dec 2018.

    More about this item

    Keywords

    Overeducation; Wage penalty; STEP survey of the World Bank; Treatment effect;

    JEL classification:

    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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