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Inefficient self-selection into education and wage inequality

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  • Ordine, Patrizia
  • Rose, Giuseppe

Abstract

Abstract This paper proposes a theoretical framework where within graduates wage inequality is related to overeducation/educational mismatch in the labor market. We show that wage inequality may arise because of inefficient self-selection into education in the presence of ability-complementary technological progress and asymmetric information on individuals' ability. In this setting, a crucial role is played by educational quality since it determines the signaling mechanisms in the labor market. We report some empirical evidence on the impact of mismatch, individual ability, family background, and university features on wages of Italian graduates and we suggest the importance of considering education quality as a policy instrument for reducing educational mismatch and wage inequality.

Suggested Citation

  • Ordine, Patrizia & Rose, Giuseppe, 2011. "Inefficient self-selection into education and wage inequality," Economics of Education Review, Elsevier, vol. 30(4), pages 582-597, August.
  • Handle: RePEc:eee:ecoedu:v:30:y:2011:i:4:p:582-597
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Rose, Giuseppe, 2013. "Endogenous ranking in a two-sector urn-ball matching process," Economics Discussion Papers 2013-40, Kiel Institute for the World Economy (IfW).
    2. repec:spr:jlabre:v:38:y:2017:i:2:d:10.1007_s12122-017-9242-y is not listed on IDEAS
    3. Masashi Tanaka, 2013. "Human Capital Investment, Credentialing, and Wage Differentials," Discussion Papers in Economics and Business 13-31-Rev., Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP), revised Aug 2017.
    4. Boccanfuso, Dorothée & Larouche, Alexandre & Trandafir, Mircea, 2015. "Quality of Higher Education and the Labor Market in Developing Countries: Evidence from an Education Reform in Senegal," World Development, Elsevier, vol. 74(C), pages 412-424.
    5. Croce, Giuseppe & Ghignoni, Emanuela, 2011. "Overeducation and spatial flexibility in Italian local labour markets," MPRA Paper 29670, University Library of Munich, Germany.
    6. Emanuela Ghignoni, 2011. "Young workers‟ overeducation and cohort effects in “P.I.G.S.†countries versus the Netherlands: a pseudo-panel analysis," Working Papers 147, University of Rome La Sapienza, Department of Public Economics.
    7. Patrizia Ordine & Giuseppe Rose, 2014. "Too Many Graduates? A Theory Of (Efficient) Educational Mismatch And Evidence From A Quasi-Natural Experiment," Working Papers 201409, Università della Calabria, Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF.
    8. repec:spr:italej:v:3:y:2017:i:1:d:10.1007_s40797-016-0044-9 is not listed on IDEAS
    9. Ghignoni, Emanuela & Verashchagina, Alina, 2014. "Educational qualifications mismatch in Europe. Is it demand or supply driven?," Journal of Comparative Economics, Elsevier, vol. 42(3), pages 670-692.
    10. Patrizia Ordine & Giuseppe Rose, 2011. "Educational Mismatch and Wait Unemployment," Working Papers 19, AlmaLaurea Inter-University Consortium.

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