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Human capital, reservation wages and job competition: Heckman's lambda re-interpreted

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  • Ides Nicaise

Abstract

This study integrates insights from three theories into a single model explaining the simultaneous distribution of employment and wages. Human capital theory is taken as the general framework, whereas search theory and the more recent 'crowding' or 'job competition' hypothesis are used to explain selectivity in employment and the resulting bias in wage regressions. An empirical test on Belgian data, using a two-stage probit-OLS model, indicates that the crowding theory dominates the search hypothesis for men. For women, it seems to be outweighed by relatively higher reservation wages, probably due to women's different behaviour with respect to family responsibilities.

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  • Ides Nicaise, 2001. "Human capital, reservation wages and job competition: Heckman's lambda re-interpreted," Applied Economics, Taylor & Francis Journals, vol. 33(3), pages 309-315.
    • Handle: RePEc:taf:applec:v:33:y:2001:i:3:p:309-315
    DOI: 10.1080/00036840121810
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    1. Floro Ernesto Caroleo & Francesco Pastore, 2012. "Overeducation at a glance. Determinants and wage effects of the educational mismatch, looking at the AlmaLaurea data," Discussion Papers 18_2012, CRISEI, University of Naples "Parthenope", Italy.
    2. Khurshid Alam & Sakiba Tasneem & Molla Huq, 2014. "Reservation wage of female volunteer community health workers in Dhaka urban slums: a bidding game approach," Health Economics Review, Springer, vol. 4(1), pages 1-10, December.
    3. Madhu Mohanty, 2005. "An alternative method of estimating the worker's reservation wage," International Economic Journal, Taylor & Francis Journals, vol. 19(4), pages 501-522.
    4. Floro Ernesto Caroleo & Francesco Pastore, 2018. "Overeducation at a Glance. Determinants and Wage Effects of the Educational Mismatch Based on AlmaLaurea Data," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 137(3), pages 999-1032, June.
    5. Kihong Park, 2021. "Qualifications, job mismatch, and workers with disabilities," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 20(2), pages 161-180, May.
    6. Min Qin & James Brown & Sabu S. Padmadas & Li Bohua & Qi Jianan & Jane Falkingham, 2016. "Gender Inequalities in Employment and Wage-earning among Economic Migrants in Chinese Cities," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 34(6), pages 175-202.
    7. Pietro Giorgio Lovaglio & Gianmarco Vacca & Stefano Verzillo, 2016. "Human capital estimation in higher education," Advances in Data Analysis and Classification, Springer;German Classification Society - Gesellschaft für Klassifikation (GfKl);Japanese Classification Society (JCS);Classification and Data Analysis Group of the Italian Statistical Society (CLADAG);International Federation of Classification Societies (IFCS), vol. 10(4), pages 465-489, December.
    8. Rycx, François & Santosuosso, Giulia & Vermeylen, Guillaume, 2022. "The Over-Education Wage Penalty among PhD Holders: A European Perspective," IZA Discussion Papers 15417, Institute of Labor Economics (IZA).
    9. Luca Cattani & Giovanni Guidetti & Giulio Pedrini, 2018. "Overeducation among Italian graduates: do different measures diverge?," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 35(2), pages 491-521, August.
    10. DeVoretz, Don J. & Pivnenko, Sergiy, 2005. "Self-Selection, Immigrant Public Finance Performance and Canadian Citizenship," IZA Discussion Papers 1463, Institute of Labor Economics (IZA).
    11. Sam, Vichet, 2018. "Impact of education-job mismatches on wage: The case of university graduates in Cambodia," MPRA Paper 110011, University Library of Munich, Germany.
    12. Luca Cattani & Giovanni Guidetti & Giulio Pedrini, 2016. "Overeducation among Italian graduates: do different measures actually diverge?," Working Papers 77, AlmaLaurea Inter-University Consortium.
    13. Mahmoud K. El-Jafari, 2010. "Efficiency and Effectiveness of Palestinian Vocational Education and Training," Working Papers 571, Economic Research Forum, revised 11 Jan 2010.
    14. Tamar Khitarishvili, 2010. "Assessing the Returns to Education in Georgia," Economics Working Paper Archive wp_608, Levy Economics Institute.
    15. Caroleo, Floro Ernesto & Pastore, Francesco, 2015. "Overeducation: A Disease of the School-to-Work Transition System," IZA Discussion Papers 9049, Institute of Labor Economics (IZA).
    16. 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.
    17. Henna Ahsan, 2024. "Impact of Education Mismatch on Earnings: Evidence from Pakistan’s Labor Market," PIDE-Working Papers 2024:1, Pakistan Institute of Development Economics.

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