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Education, educational mismatch, and wage inequality: Evidence for Spain

  • Budría, Santiago
  • Moro-Egido, Ana I.

In this paper, we explore the connection between education and wage inequality in Spain for the period 1994-2001. Drawing on quantile regression, we describe the conditional wage distribution of different populations groups. We find that higher education is associated with higher wage dispersion. A contribution of the paper is that we explicitly take into account the fact that workers who are and workers who are not in jobs commensurate with their qualifications have a different distribution of earnings. We differentiate between three different types of educational mismatch: 'over-qualification', 'incorrect qualification', and 'strong mismatch'. We find that while over-qualification and incorrect qualification are not associated with lower wages, strong mismatch carries a pay penalty that ranges from 13% to 27%. Thus, by driving a wedge between matched and mismatched workers, the incidence of strong mismatch contributes to enlarge wage differences within education groups. We find that over the recent years, the proportion of strongly mismatched workers rose markedly in Spain, contributing toward further within-groups dispersion.

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Article provided by Elsevier in its journal Economics of Education Review.

Volume (Year): 27 (2008)
Issue (Month): 3 (June)
Pages: 332-341

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Handle: RePEc:eee:ecoedu:v:27:y:2008:i:3:p:332-341
Contact details of provider: Web page: http://www.elsevier.com/locate/econedurev

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  1. Budria, Santiago & Telhado-Pereira, Pedro, 2005. "Educational Qualifications and Wage Inequality: Evidence for Europe," MPRA Paper 91, University Library of Munich, Germany.
  2. Franco Peracchi, 2002. "The European Community Household Panel: A review," Empirical Economics, Springer, vol. 27(1), pages 63-90.
  3. Sattinger, Michael, 1993. "Assignment Models of the Distribution of Earnings," Journal of Economic Literature, American Economic Association, vol. 31(2), pages 831-80, June.
  4. Moshe Buchinsky, 1998. "Recent Advances in Quantile Regression Models: A Practical Guideline for Empirical Research," Journal of Human Resources, University of Wisconsin Press, vol. 33(1), pages 88-126.
  5. Fersterer, Josef & Winter-Ebmer, Rudolf, 1999. "Are Austrian Returns to Education Falling Over Time?," CEPR Discussion Papers 2313, C.E.P.R. Discussion Papers.
  6. Pereira, Pedro Telhado & Martins, Pedro Silva, 2002. "Does Education Reduce Wage Inequality? Quantile Regressions Evidence from Fifteen European Countries," Discussion Papers 709, The Research Institute of the Finnish Economy.
  7. Machin, Stephen, 1996. "Wage Inequality in the UK," Oxford Review of Economic Policy, Oxford University Press, vol. 12(1), pages 47-64, Spring.
  8. Gosling, Amanda & Machin, Stephen & Meghir, Costas, 2000. "The Changing Distribution of Male Wages in the U.K," Review of Economic Studies, Wiley Blackwell, vol. 67(4), pages 635-66, October.
  9. Richard R. Verdugo & Naomi Turner Verdugo, 1989. "The Impact of Surplus Schooling on Earnings: Some Additional Findings," Journal of Human Resources, University of Wisconsin Press, vol. 24(4), pages 629-643.
  10. Javier Gardeazabal & Arantza Ugidos, . "Measuring the gender gap at different quantiles of the wage distribution," Studies on the Spanish Economy 108, FEDEA.
  11. de la Rica, Sara & Dolado, Juan J. & Llorens, Vanesa, 2005. "Ceiling and Floors: Gender Wage Gaps by Education in Spain," IZA Discussion Papers 1483, Institute for the Study of Labor (IZA).
  12. Ana I Moro-Egido & Santiago Budría, . "Education, Over-education, and Wage Inequality: Evidence for Spain," Studies on the Spanish Economy 211, FEDEA.
  13. F Green & Steven McIntosh & Anna Vignoles, 1999. "Overeducation and Skills - Clarifying the Concepts," CEP Discussion Papers dp0435, Centre for Economic Performance, LSE.
  14. 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.
  15. Joop Hartog & Pedro Pereira & Jose Vieira, 2001. "Changing returns to education in Portugal during the 1980s and early 1990s: OLS and quantile regression estimators," Applied Economics, Taylor & Francis Journals, vol. 33(8), pages 1021-1037.
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