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Estimating the returns to educational mismatch with panel data: the role of unobserved heterogeneity

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  • Marco PECORARO

    () (SFM, Université de Neuchâtel and UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))

Abstract

Using longitudinal data from the Swiss Household Panel, this analysis suggests that the cross-sectional estimates of the returns to educational mismatch are significantly biased when unobserved heterogeneity is omitted in the wage equation. The results of the standard fixed effects model indeed demonstrate that the wage returns to education are independent of the job requirements. Hence, this empirical analysis supports the human capital interpretation of the Swiss labour market.

Suggested Citation

  • Marco PECORARO, 2011. "Estimating the returns to educational mismatch with panel data: the role of unobserved heterogeneity," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2011036, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  • Handle: RePEc:ctl:louvir:2011036
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    File URL: http://sites.uclouvain.be/econ/DP/IRES/2011036.pdf
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    References listed on IDEAS

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    1. Hartog, Joop, 2000. "Over-education and earnings: where are we, where should we go?," Economics of Education Review, Elsevier, vol. 19(2), pages 131-147, April.
    2. Leuven, Edwin & Oosterbeek, Hessel, 2011. "Overeducation and Mismatch in the Labor Market," Handbook of the Economics of Education, Elsevier.
    3. Sylvain Weber, 2014. "Human capital depreciation and education level," International Journal of Manpower, Emerald Group Publishing, vol. 35(5), pages 613-642, July.
    4. Bauer, Thomas K., 2002. "Educational mismatch and wages: a panel analysis," Economics of Education Review, Elsevier, vol. 21(3), pages 221-229, June.
    5. Séamus McGuinness, 2006. "Overeducation in the Labour Market," Journal of Economic Surveys, Wiley Blackwell, vol. 20(3), pages 387-418, July.
    6. Kiker, B. F. & Santos, Maria C. & de Oliveira, M. Mendes, 1997. "Overeducation and undereducation: Evidence for Portugal," Economics of Education Review, Elsevier, vol. 16(2), pages 111-125, April.
    7. Mendes de Oliveira, M. & Santos, M. C. & Kiker, B. F., 2000. "The role of human capital and technological change in overeducation," Economics of Education Review, Elsevier, vol. 19(2), pages 199-206, April.
    8. Rubb, S., 2003. "Overeducation in the labor market: a comment and re-analysis of a meta-analysis," Economics of Education Review, Elsevier, vol. 22(6), pages 621-629, December.
    9. Arnaud Chevalier, 2003. "Measuring Over-education," Economica, London School of Economics and Political Science, vol. 70(279), pages 509-531, August.
    10. Korpi, Tomas & Tåhlin, Michael, 2009. "Educational mismatch, wages, and wage growth: Overeducation in Sweden, 1974-2000," Labour Economics, Elsevier, vol. 16(2), pages 183-193, April.
    11. Russell W. Rumberger, 1987. "The Impact of Surplus Schooling on Productivity and Earnings," Journal of Human Resources, University of Wisconsin Press, vol. 22(1), pages 24-50.
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    Cited by:

    1. Marco Pecoraro, 2014. "Is There Still a Wage Penalty for Being Overeducated But Well-matched in Skills? A Panel Data Analysis of a Swiss Graduate Cohort," LABOUR, CEIS, vol. 28(3), pages 309-337, September.

    More about this item

    Keywords

    Educational mismatch; wages; panel data analysis; human capital;

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