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A Panel Study of Immigrants' Overeducation and Earnings in Australia

Author

Listed:
  • Wen, Le

    () (University of Auckland)

  • Maani, Sholeh A.

    () (University of Auckland)

Abstract

The recent literature on overeducation has provided divergent results on whether or not overeducation bears an earnings penalty. In addition, few studies have considered overeducation among immigrants. This paper uses panel data analyses to investigate the match between education and occupation and resulting earnings effects for immigrants from English Speaking, and Non-English Speaking, Backgrounds relative to the native-born population in Australia. Based on nine years of longitudinal data, the panel approach addresses individual heterogeneity effects (motivation, ability, and compensating differentials) that are crucial in overeducation analysis. First, we find that immigrants have significantly higher incidence rates of overeducation than the native-born. This probability increases, rather than diminishes, once we control for unobserved correlated effects. Second, based on panel fixed effects analyses there is no penalty for overeducation for ESB immigrants. However, NESB immigrants receive a lower return to required and overeducation compared to the other groups after controlling for individual heterogeneity.

Suggested Citation

  • Wen, Le & Maani, Sholeh A., 2017. "A Panel Study of Immigrants' Overeducation and Earnings in Australia," IZA Discussion Papers 11216, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp11216
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    Keywords

    over-education; educational mismatch; immigrants; non-English-speaking; panel data; wage effects;

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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