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Overeducation, Skills and Wage Penalty: Evidence for Spain Using PIAAC Data

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  • Sandra Nieto

    () (Universitat Oberta de Catalunya)

  • Raul Ramos

    () (Universitat de Barcelona)

Abstract

The literature on educational mismatches finds that overeducated workers suffer a wage penalty compared with properly educated workers with the same level of education. Recent literature also suggests that individuals’ skill heterogeneity could explain wage differences between overeducated and properly matched workers. The hypothesis is that overeducated workers earn less due to their lower competences and skills in relative terms. However, that hypothesis has been rarely tested due to data limitations on individuals’ skills. The aim of this paper is to test the individuals’ skill heterogeneity theory in Spain using microdata from PIAAC, because it is one of the developed countries supporting the highest overeducation rates and where its adult population holds the lowest level of skills among a set of developed countries. Our hypothesis is that the wage penalty of overeducation in Spain is explained by the lower skill level of overeducated workers. The obtained evidence confirms this hypothesis but only to a certain extent as skills only explain partially the wage penalty of overeducation.

Suggested Citation

  • Sandra Nieto & Raul Ramos, 2017. "Overeducation, Skills and Wage Penalty: Evidence for Spain Using PIAAC Data," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 134(1), pages 219-236, October.
  • Handle: RePEc:spr:soinre:v:134:y:2017:i:1:d:10.1007_s11205-016-1423-1
    DOI: 10.1007/s11205-016-1423-1
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    Cited by:

    1. Francesc Obiols-Homs & Virginia Sánchez-Marcos, 2015. "Education, Occupation-Mismatch and Unemployment," Working Papers 807, Barcelona Graduate School of Economics.
    2. Mysíková Martina, 2016. "Educational mismatch in the Czech Labour Market," Review of Economic Perspectives, Sciendo, vol. 16(2), pages 103-120, June.
    3. Maqbool H. Sial & Ghulam Sarwar & Mubashra Saeed, 2019. "Surplus Education and Earnings Differentials in Pakistan: A Quantile Regression Analysis," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 24(2), pages 93-114, July-Dec.
    4. Joaquin Turmo-Garuz & M.-Teresa Bartual-Figueras & Francisco-Javier Sierra-Martinez, 2019. "Factors Associated with Overeducation Among Recent Graduates During Labour Market Integration: The Case of Catalonia (Spain)," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 144(3), pages 1273-1301, August.
    5. Hanol Lee & Jong‐Wha Lee & Eunbi Song, 2016. "Effects of Educational Mistmatch on Wages in the Korean Labor Market," Asian Economic Journal, East Asian Economic Association, vol. 30(4), pages 375-400, December.

    More about this item

    Keywords

    Overeducation; Individual’s skill heterogeneity; Wages;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • C13 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Estimation: General

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