IDEAS home Printed from https://ideas.repec.org/p/iab/iabdpa/201710.html
   My bibliography  Save this paper

Wage losses due to overqualification: The role of formal degrees and occupational skills

Author

Listed:
  • Kracke, Nancy

    (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])

  • Reichelt, Malte

    () (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])

  • Vicari, Basha

    () (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])

Abstract

"Wage penalties in overqualified employment are well documented, but little is known regarding the underlying mechanisms. We test two explanations, namely, formal overqualification and a mismatch of occupational skills. By using the National Educational Panel Study (NEPS) survey that is linked to German administrative data, we can objectively measure both types of mismatches. By using fixed-effects models, we confirm that overqualification is associated with a wage loss of approximately 5 percent, which indicates penalties from a lower requirement level. We find that some of this wage loss can be explained by a mismatch of skills between the current and training occupation. Further analyses show that mismatches of occupational skills explain the wage loss of the formal overqualification of employees with vocational training. For academics, both types of mismatch are unrelated. We conclude that because of occupational boundaries and more specific occupational skills, the people who are overqualified with vocational training more often work in jobs with lower and different skill requirements." (Author's abstract, IAB-Doku) ((en))

Suggested Citation

  • Kracke, Nancy & Reichelt, Malte & Vicari, Basha, 2017. "Wage losses due to overqualification: The role of formal degrees and occupational skills," IAB Discussion Paper 201710, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
  • Handle: RePEc:iab:iabdpa:201710
    as

    Download full text from publisher

    File URL: http://doku.iab.de/discussionpapers/2017/dp1017.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Richard Desjardins & Kjell Rubenson, 2011. "An Analysis of Skill Mismatch Using Direct Measures of Skills," OECD Education Working Papers 63, OECD Publishing.
    2. Arnaud Chevalier & Joanne Lindley, 2009. "Overeducation and the skills of UK graduates," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 172(2), pages 307-337.
    3. 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.
    4. Kathryn L. Shaw, 1984. "A Formulation of the Earnings Function Using the Concept of Occupational Investment," Journal of Human Resources, University of Wisconsin Press, vol. 19(3), pages 319-340.
    5. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70, pages 1-9.
    6. Brynin, Malcolm & Longhi, Simonetta, 2009. "Overqualification: Major or minor mismatch?," Economics of Education Review, Elsevier, vol. 28(1), pages 114-121, February.
    7. 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 434-452, July.
    8. Bauer, Thomas K., 2002. "Educational mismatch and wages: a panel analysis," Economics of Education Review, Elsevier, vol. 21(3), pages 221-229, June.
    9. Sattinger, Michael, 1993. "Assignment Models of the Distribution of Earnings," Journal of Economic Literature, American Economic Association, vol. 31(2), pages 831-880, June.
    10. Séamus McGuinness, 2006. "Overeducation in the Labour Market," Journal of Economic Surveys, Wiley Blackwell, vol. 20(3), pages 387-418, July.
    11. David H. Autor & Michael J. Handel, 2013. "Putting Tasks to the Test: Human Capital, Job Tasks, and Wages," Journal of Labor Economics, University of Chicago Press, vol. 31(S1), pages 59-96.
    12. Dieter Verhaest & Eddy Omey, 2010. "The determinants of overeducation: different measures, different outcomes?," International Journal of Manpower, Emerald Group Publishing, vol. 31(6), pages 608-625, September.
    13. Kostas Mavromaras & Seamus McGuinness & Mark Wooden, 2007. "Overskilling in the Australian Labour Market," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 40(3), pages 307-312, September.
    14. Christina Gathmann & Uta Schönberg, 2010. "How General Is Human Capital? A Task-Based Approach," Journal of Labor Economics, University of Chicago Press, vol. 28(1), pages 1-49, January.
    15. McGuinness, Seamus & Sloane, Peter J., 2011. "Labour market mismatch among UK graduates: An analysis using REFLEX data," Economics of Education Review, Elsevier, vol. 30(1), pages 130-145, February.
    16. Sara Flisi & Valentina Goglio & Elena Claudia Meroni & Margarida Rodrigues & Esperanza Vera-Toscano, 2017. "Measuring Occupational Mismatch: Overeducation and Overskill in Europe—Evidence from PIAAC," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 131(3), pages 1211-1249, April.
    17. A. Colin Cameron & Pravin K. Trivedi, 2010. "Microeconometrics Using Stata, Revised Edition," Stata Press books, StataCorp LP, number musr.
    18. Acemoglu, Daron & Autor, David, 2011. "Skills, Tasks and Technologies: Implications for Employment and Earnings," Handbook of Labor Economics, Elsevier.
    19. Velden R.K.W. Van der & Smoorenburg M.S.M. van, 1997. "The Measurement of Overeducation and Undereducation: Self-Report vs. Job Analyst Method," ROA Research Memorandum 002, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    20. Shaw, Kathryn L, 1987. "The Quit Propensity of Married Men," Journal of Labor Economics, University of Chicago Press, vol. 5(4), pages 533-560, October.
    21. Dengler, Katharina & Stops, Michael & Vicari, Basha, 2016. "Occupation-specific matching efficiency," IAB Discussion Paper 201616, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    22. Jacob A. Mincer, 1974. "Age and Experience Profiles of Earnings," NBER Chapters,in: Schooling, Experience, and Earnings, pages 64-82 National Bureau of Economic Research, Inc.
    23. Lars Wenzel & André Wolf, 2014. "Changing Patterns of Electricity Usage in European Manufacturing: A Decomposition Analysis," International Journal of Energy Economics and Policy, Econjournals, pages 516-530.
    24. Glenda Quintini, 2011. "Right for the Job: Over-Qualified or Under-Skilled?," OECD Social, Employment and Migration Working Papers 120, OECD Publishing.
    25. 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.
    26. Dengler, Katharina & Matthes, Britta & Paulus, Wiebke, 2014. "Occupational Tasks in the German Labour Market : an alternative measurement on the basis of an expert database," FDZ Methodenreport 201412_en, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    27. Arnaud Chevalier, 2003. "Measuring Over-education," Economica, London School of Economics and Political Science, vol. 70(279), pages 509-531, August.
    28. Kritkorn Nawakitphaitoon & Russell Ormiston, 2016. "The estimation methods of occupational skills transferability
      [Die Methoden zur Einschätzung der Übertragbarkeit beruflicher Kompetenzen]
      ," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 49(4), pages 317-327, December.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Überqualifikation; Einkommenseffekte; unterwertige Beschäftigung; Nationales Bildungspanel; mismatch; berufliche Qualifikation; Ausbildungsabschluss; Studienabschluss; Ausbildungsabsolventen; Hochschulabsolventen; Bildungsertrag;

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • 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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iab:iabdpa:201710. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (IAB, Geschäftsbereich Dokumentation und Bibliothek). General contact details of provider: http://edirc.repec.org/data/iabbbde.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.