IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp2837.html
   My bibliography  Save this paper

Assessing the Incidence and Wage Effects of Over-Skilling in the Australian Labour Market

Author

Listed:
  • Mavromaras, Kostas

    (University of Adelaide)

  • McGuinness, Seamus

    (Economic and Social Research Institute, Dublin)

  • Fok, Yin King

    (Melbourne Institute of Applied Economic and Social Research)

Abstract

This paper examines the incidence and wage effects of over-skilling within the Australian labour market. It finds that approximately 30 percent of employees believed themselves to be moderately over-skilled and 11 percent believed themselves to be severely over-skilled. The incidence of skills mismatch varied little when the sample was split by education. After controlling for individual and job characteristics as well as the potential bias arising from individual unobserved heterogeneity, severely over-skilled workers suffer an average wage penalty of 13.3 percent with the penalty ranging from about 8 percent among vocationally qualified employees to over 20 percent for graduates.

Suggested Citation

  • Mavromaras, Kostas & McGuinness, Seamus & Fok, Yin King, 2007. "Assessing the Incidence and Wage Effects of Over-Skilling in the Australian Labour Market," IZA Discussion Papers 2837, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp2837
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp2837.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Séamus McGuinness, 2006. "Overeducation in the Labour Market," Journal of Economic Surveys, Wiley Blackwell, vol. 20(3), pages 387-418, July.
    2. Battu, H. & Belfield, C.R. & Sloane, P.J., 2000. "How Well Can We Measure Graduate Over- Education and Its Effects?," National Institute Economic Review, National Institute of Economic and Social Research, vol. 171, pages 82-93, January.
    3. Marzano, Elisabetta, 2003. "Looking for a job: is there any homogeneity among those not seeking work?," ISER Working Paper Series 2003-25, Institute for Social and Economic Research.
    4. Ingrid Linsley, 2005. "Causes of Overeducation in the Australian Labour Market," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 8(2), pages 121-143, June.
    5. Lorraine Dearden & Howard Reed & John Van Reenen, 2006. "The Impact of Training on Productivity and Wages: Evidence from British Panel Data," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 68(4), pages 397-421, August.
    6. Nicole Watson & Mark Wooden, 2004. "The HILDA Survey Four Years On," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 37(3), pages 343-349, September.
    7. Kostas Mavromaras & Seamus Mcguinness & Nigel O'Leary & Peter Sloane & Yi King Fok, 2010. "The Problem Of Overskilling In Australia And Britain," Manchester School, University of Manchester, vol. 78(3), pages 219-241, June.
    8. Ingrid Linsley, 2005. "Overeducation in the Australian Labour Market : Its Incidence and Effects," Department of Economics - Working Papers Series 939, The University of Melbourne.
    9. Ingrid Linsley, 2005. "Causes of Overeducation in the Australian Labour Market," Department of Economics - Working Papers Series 940, The University of Melbourne.
    10. Stephen P. Jenkins & Lars Osberg, 2003. "Nobody to Play with?: The Implications of Leisure Coordination," Discussion Papers of DIW Berlin 368, DIW Berlin, German Institute for Economic Research.
    11. Seamus McGuinness, 2007. "How biased are the estimated wage impacts of overeducation? A propensity score matching approach," Applied Economics Letters, Taylor & Francis Journals, vol. 15(2), pages 145-149.
    12. Derby Voon & Paul W. Miller, 2005. "Undereducation and Overeducation in the Australian Labour Market," The Economic Record, The Economic Society of Australia, vol. 81(s1), pages 22-33, August.
    13. Sascha O. Becker & Andrea Ichino, 2002. "Estimation of average treatment effects based on propensity scores," Stata Journal, StataCorp LP, vol. 2(4), pages 358-377, November.
    14. Sattinger, Michael, 1993. "Assignment Models of the Distribution of Earnings," Journal of Economic Literature, American Economic Association, vol. 31(2), pages 831-880, June.
    15. John Goddard & Peter J. Sloane, 2005. "Economics of sport," Chapters, in: Simon W. Bowmaker (ed.), Economics Uncut, chapter 12, Edward Elgar Publishing.
    16. Parvinder Kler, 2005. "Graduate overeducation in Australia: A comparison of the mean and objective methods," Education Economics, Taylor & Francis Journals, vol. 13(1), pages 47-72.
    17. Richard Disney & Amanda Gosling, 1998. "Does it pay to work in the public sector?," Fiscal Studies, Institute for Fiscal Studies, vol. 19(4), pages 347-374, November.
    18. Borghans, L. & de Grip, A., 1999. "Skills and low pay: upgrading or overeducation?," ROA Research Memorandum 5E, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    19. 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.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Wen, Le & Maani, Sholeh A., 2023. "Earnings Penalty of Educational Mismatch: A Comparison of Alternative Methods of Assessing Over-Education," IZA Discussion Papers 15943, Institute of Labor Economics (IZA).
    2. Hanan Morsy & Adamon N. Mukasa, 2019. "Working Paper 326 - Youth Jobs, Skill and Educational Mismatches in Africa," Working Paper Series 2452, African Development Bank.
    3. Ferreira Sequeda, Maria & Künn, Annemarie & de Grip, Andries, 2016. "Work-related learning and skill development in Europe: Does initial skill mismatch matter?," Research Memorandum 027, Maastricht University, Graduate School of Business and Economics (GSBE).
    4. Seamus McGuinness & Mark Wooden, 2007. "Overskilling, Job Insecurity and Career Mobility: Evidence from Australia," Melbourne Institute Working Paper Series wp2007n09, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    5. Jian Z. Yeo & Sholeh A. Maani, 2017. "Educational mismatches and earnings in the New Zealand labour market," New Zealand Economic Papers, Taylor & Francis Journals, vol. 51(1), pages 28-48, January.
    6. Morsy, Hanan & Mukasa, Adamon, 2019. "Youth Jobs, Skill and Educational Mismatches in Africa," MPRA Paper 100394, University Library of Munich, Germany.
    7. Giuseppe Croce & Emanuela Ghignoni, 2011. "Overeducation and spatial flexibility in Italian local labour markets," Working Papers in Public Economics 145, University of Rome La Sapienza, Department of Economics and Law.
    8. Meroni, Elena Claudia & Vera-Toscano, Esperanza, 2017. "The persistence of overeducation among recent graduates," Labour Economics, Elsevier, vol. 48(C), pages 120-143.
    9. Kostas Mavromaras & Seamus McGuinness & Nigel O'Leary & Peter Sloane & Zhang Wei, 2013. "Job Mismatches and Labour Market Outcomes: Panel Evidence on University Graduates," The Economic Record, The Economic Society of Australia, vol. 89(286), pages 382-395, September.
    10. Jones, Melanie K & Mavromaras, Kostas & Sloane, Peter J & Wei, Zhang (NILS), 2011. "NILS Working paper no 176. Disability and job mismatches in the Australian labour market," NILS Working Papers 26074, National Institute of Labour Studies.
    11. 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.
    12. Carroll, David & Tani, Massimiliano, 2013. "Over-education of recent higher education graduates: New Australian panel evidence," Economics of Education Review, Elsevier, vol. 32(C), pages 207-218.
    13. Jones, Melanie K. & Mavromaras, Kostas & Sloane, Peter J. & Wei, Zhang, 2011. "Disability and Job Mismatches in the Australian Labour Market," IZA Discussion Papers 6152, Institute of Labor Economics (IZA).
    14. Brynin, Malcolm & Longhi, Simonetta, 2009. "Overqualification: Major or minor mismatch?," Economics of Education Review, Elsevier, vol. 28(1), pages 114-121, February.
    15. Balzhan Serikbayeva & Kanat Abdulla, 2022. "Education-Job Mismatch: Implications for Individual Earnings and Aggregate Output," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 163(2), pages 723-752, September.
    16. David Carroll & Massimiliano Tani, 2015. "Job search as a determinant of graduate over-education: evidence from Australia," Education Economics, Taylor & Francis Journals, vol. 23(5), pages 631-644, October.
    17. Kitae Sohn, 2010. "The Role of Cognitive and Noncognitive Skills in Overeducation," Journal of Labor Research, Springer, vol. 31(2), pages 124-145, June.
    18. Sattinger, Michael & Hartog, Joop, 2013. "Nash bargaining and the wage consequences of educational mismatches," Labour Economics, Elsevier, vol. 23(C), pages 50-56.
    19. Shujaat Farooq, 2015. "Job Mismatches in Pakistan: Is there Some Wage Penalty to Graduates?," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 54(2), pages 147-164.
    20. Tani, Massimiliano, 2012. "Does Immigration Policy Affect the Education-Occupation Mismatch? Evidence from Australia," IZA Discussion Papers 6937, Institute of Labor Economics (IZA).

    More about this item

    Keywords

    education; skills;

    JEL classification:

    • 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:iza:izadps:dp2837. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.