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Overskilling dynamics and education pathways

  • Mavromaras, Kostas
  • McGuinness, Seamus

This paper uses panel data and econometric methods to estimate the incidence and the dynamic properties of overskilling among employed individuals. The paper begins by asking whether there is extensive overskilling in the labour market, and whether overskilling differs by education pathway. The answer to both questions is yes. The paper continues by asking whether overskilling is a self-perpetuating labour market state (state dependence), and whether state dependence differs by education pathway. Overskilled workers with a higher degree show the highest state dependence, while workers with vocational education show none. Workers with no post-school qualifications are somewhere between these two groups. The finding that higher degree graduates suffer the greatest overskilling state dependence, combined with the well-established finding that they also suffer the highest overskilling wage penalty, suggests that the cost of mismatch among this grouping are greater relative to vocationally qualified workers.

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

Volume (Year): 31 (2012)
Issue (Month): 5 ()
Pages: 619-628

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Handle: RePEc:eee:ecoedu:v:31:y:2012:i:5:p:619-628
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  1. McGuinness, Seamus & Wooden, Mark, 2007. "Overskilling, Job Insecurity and Career Mobility," IZA Discussion Papers 2938, Institute for the Study of Labor (IZA).
  2. Francis Green & Steven McIntosh, 2007. "Is there a genuine under-utilization of skills amongst the over-qualified?," Applied Economics, Taylor & Francis Journals, vol. 39(4), pages 427-439.
  3. Wiji Arulampalam & Mark B. Stewart, 2009. "Simplified Implementation of the Heckman Estimator of the Dynamic Probit Model and a Comparison with Alternative Estimators," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 71(5), pages 659-681, October.
  4. Frances Ruane & Xiaoheng Zhang, 2007. "Location Choices of the Pharmaceutical Industry in Europe after 1992," The Institute for International Integration Studies Discussion Paper Series iiisdp220, IIIS.
  5. Kostas Mavromaras & Seamus McGuinness & Nigel O’Leary & Peter Sloane & Yin King Fok, 2007. "The Problem of Overskilling in Australia and Britain," Melbourne Institute Working Paper Series wp2007n33, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  6. Oded Galor & Nachum Sicherman, 1988. "A Theory of Career Mobility," University of Chicago - George G. Stigler Center for Study of Economy and State 51, Chicago - Center for Study of Economy and State.
  7. Kostas Mavromaras & Seamus Mcguinness & Yin King Fok, 2009. "Assessing the Incidence and Wage Effects of Overskilling in the Australian Labour Market," The Economic Record, The Economic Society of Australia, vol. 85(268), pages 60-72, 03.
  8. McGuinness, Seamus & Sloane, Peter J., 2009. "Labour Market Mismatch Among UK Graduates: An Analysis Using REFLEX Data," IZA Discussion Papers 4168, Institute for the Study of Labor (IZA).
  9. P. J. Sloane & H. Battu & P. T. Seaman, 1999. "Overeducation, undereducation and the British labour market," Applied Economics, Taylor & Francis Journals, vol. 31(11), pages 1437-1453.
  10. Allen, Jim & van der Velden, Rolf, 2001. "Educational Mismatches versus Skill Mismatches: Effects on Wages, Job Satisfaction, and On-the-Job Search," Oxford Economic Papers, Oxford University Press, vol. 53(3), pages 434-52, July.
  11. Seán Lyons & Karen Mayor & Richard S.J. Tol, 2008. "Environmental Accounts for the Republic of Ireland: 1990-2005," Papers WP223, Economic and Social Research Institute (ESRI).
  12. James J. Heckman, 1981. "Heterogeneity and State Dependence," NBER Chapters, in: Studies in Labor Markets, pages 91-140 National Bureau of Economic Research, Inc.
  13. Francis Green & Yu Zhu, 2008. "Overqualification, Job Dissatisfaction, and Increasing Dispersion in the Returns to Graduate Education," Studies in Economics 0803, School of Economics, University of Kent.
  14. Jeffrey M Wooldridge, 2002. "Simple solutions to the initial conditions problem in dynamic, nonlinear panel data models with unobserved heterogeneity," CeMMAP working papers CWP18/02, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  15. Heckman, James J, 1991. "Identifying the Hand of the Past: Distinguishing State Dependence from Heterogeneity," American Economic Review, American Economic Association, vol. 81(2), pages 75-79, May.
  16. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
  17. McGuinness, Seamus & Bennett, Jessica, 2007. "Overeducation in the graduate labour market: A quantile regression approach," Economics of Education Review, Elsevier, vol. 26(5), pages 521-531, October.
  18. Seamus McGuinness, 2003. "University quality and labour market outcomes," Applied Economics, Taylor & Francis Journals, vol. 35(18), pages 1943-1955.
  19. Séamus McGuinness, 2006. "Overeducation in the Labour Market," Journal of Economic Surveys, Wiley Blackwell, vol. 20(3), pages 387-418, 07.
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