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A Mismatch Made in Heaven: A Hedonic Analysis of Overeducation and Undereducation

Author

Listed:
  • Daniel P. McMillen

    () (Department of Economics, University of Illinois at Chicago)

  • Paul T. Seaman

    () (Department of Economic Studies, University of Dundee)

  • Larry D. Singell Jr

    () (Department of Economics, University of Oregon)

Abstract

In this paper, a hedonic pairing process is modeled in which some workers may be overeducated or undereducated as an equilibrium outcome of a dynamic labor market. Undereducated workers are those whose abilities and training permit them to move into a job with higher qualifications, whereas overeducated workers are highly qualified workers who select into lower-skill, entry-level jobs that provide the training (or signal) necessary for promotion. The empirical model shows that these pairing types cannot be directly identified in a cross section since all workers are exactly educated during a portion of their career. However, pairing types may be imputed by comparing predicted and observed qualifications of the worker and predicted and observed requirements of the firm. Using a rich cross section and a panel of British working-age males to identify the pairing types, we confirm the predicted career development patterns with regard to on-the-job training, promotion, and wages.

Suggested Citation

  • Daniel P. McMillen & Paul T. Seaman & Larry D. Singell Jr, 2007. "A Mismatch Made in Heaven: A Hedonic Analysis of Overeducation and Undereducation," Southern Economic Journal, Southern Economic Association, vol. 73(4), pages 901-930, April.
  • Handle: RePEc:sej:ancoec:v:73:4:y:2007:p:901-930
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    Cited by:

    1. Dieter Verhaest & Eddy Omey, 2013. "The Relationship Between Formal Education And Skill Acquisition In Young Workers' First Jobs," Manchester School, University of Manchester, vol. 81(4), pages 638-659, July.
    2. Cebula, Richard J., 2009. "The Hedonic Pricing Model Applied to the Housing Market of the City of Savannah and Its Savannah Historic Landmark District," The Review of Regional Studies, Southern Regional Science Association, vol. 39(1), pages 9-22.
    3. Ofer Malamud, 2010. "Breadth versus Depth: The Timing of Specialization in Higher Education," LABOUR, CEIS, vol. 24(4), pages 359-390, December.
    4. Verhaest, Dieter & Omey, Eddy, 2009. "The relation between formal education and skill acquisition in young workers first job," Working Papers 2009/07, Hogeschool-Universiteit Brussel, Faculteit Economie en Management.

    More about this item

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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