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Does the Choice of Reference Levels of Education Matter in the ORU Earnings Equation?

Author

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  • Chiswick, Barry R.

    (George Washington University)

  • Miller, Paul W.

    (Curtin University)

Abstract

This paper examines whether the results of the earnings equation developed in the overeducation/required eduation/under-education (ORU) literature are sensitive to whether the usual or reference levels of education are measured using the Realized Matches or Worker Self-Assessment methods. The analyses are conducted for all male native-born and immigrant workers in the US, by level of skill, and by occupation. While point estimates differ, particularly when earnings equations are estimated for the smaller samples of sub-groups of the workforce, the general findings are robust to this measurement issue. Thus, the answers provided to the typical research questions in the ORU literature on the utilization of schooling are independent of the measure of the usual or reference level of education used in the analyses.

Suggested Citation

  • Chiswick, Barry R. & Miller, Paul W., 2009. "Does the Choice of Reference Levels of Education Matter in the ORU Earnings Equation?," IZA Discussion Papers 4382, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp4382
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    1. Chiswick, Barry R. & Miller, Paul W., 2009. "Educational Mismatch: Are High-Skilled Immigrants Really Working at High-Skilled Jobs and the Price They Pay If They Aren't?," IZA Discussion Papers 4280, Institute of Labor Economics (IZA).
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    3. Chiswick, Barry R. & Miller, Paul W., 2008. "Why is the payoff to schooling smaller for immigrants?," Labour Economics, Elsevier, vol. 15(6), pages 1317-1340, December.
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    10. Vahey, Shaun P., 2000. "The great Canadian training robbery: evidence on the returns to educational mismatch," Economics of Education Review, Elsevier, vol. 19(2), pages 219-227, April.
    11. van der Meer, Peter H., 2006. "The validity of two education requirement measures," Economics of Education Review, Elsevier, vol. 25(2), pages 211-219, April.
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    Cited by:

    1. Rossen Anja & Boll Christina & Wolf André, 2019. "Patterns of Overeducation in Europe: The Role of Field of Study," IZA Journal of Labor Policy, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 9(1), pages 1-48, June.
    2. Christina Boll & Julian Sebastian Leppin, 2016. "Differential Overeducation in East and West Germany: Extending Frank's Theory on Economic Returns Changes the Picture of Disadvantaged Women," LABOUR, CEIS, vol. 30(4), pages 455-504, December.
    3. Chiswick, Barry R. & Miller, Paul W., 2009. "Educational Mismatch: Are High-Skilled Immigrants Really Working at High-Skilled Jobs and the Price They Pay If They Aren't?," IZA Discussion Papers 4280, Institute of Labor Economics (IZA).
    4. Prateek Kukreja, 2019. "Skill Mismatch and Returns to Education in Manufacturing: A Case of India’s Textile and Clothing Industry," Working Papers id:13003, eSocialSciences.
    5. Arnaud Herault, 2019. "Occupational mismatch and network effects: Evidence from France," Post-Print hal-02860048, HAL.
    6. Ren, Weiwei & Miller, Paul W., 2012. "Changes over time in the return to education in urban China: Conventional and ORU estimates," China Economic Review, Elsevier, vol. 23(1), pages 154-169.
    7. Christian K. Darko & Kennedy K. Abrokwa, 2020. "Do you really need it? Educational mismatch and earnings in Ghana," Review of Development Economics, Wiley Blackwell, vol. 24(4), pages 1365-1392, November.
    8. Abbi Kedir & Andri Kyrizi & Francisco Martinez-Mora, 2012. "Signalling and Productivity Effects of Overeducation: Is It Really a Waste of Resources?," Discussion Papers in Economics 12/19, Division of Economics, School of Business, University of Leicester.
    9. Pernilla Joona & Nabanita Gupta & Eskil Wadensjö, 2014. "Overeducation among immigrants in Sweden: incidence, wage effects and state dependence," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-23, December.
    10. Ian W. Li & Paul W. Miller, 2015. "Overeducation and earnings in the Australian graduate labour market: an application of the Vahey model," Education Economics, Taylor & Francis Journals, vol. 23(1), pages 63-83, February.
    11. Marta Palczyńska, 2021. "Overeducation and wages: the role of cognitive skills and personality traits," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 21(1), pages 85-111.
    12. Weiwei Ren & Paul W. Miller, 2012. "Gender Differentials in the Payoff to Schooling in Rural China," Journal of Development Studies, Taylor & Francis Journals, vol. 48(1), pages 133-150, September.
    13. Prateek Kukreja, 2018. "Skill Mismatch and Returns to Education in Manufacturing: A Case of India's Textile and Clothing Industry," Indian Council for Research on International Economic Relations (ICRIER) Working Paper 364, Indian Council for Research on International Economic Relations (ICRIER), New Delhi, India.
    14. Chiswick, Barry R. & Miller, Paul W., 2009. "An Explanation for the Lower Payoff to Schooling for Immigrants in the Canadian Labour Market," IZA Discussion Papers 4448, Institute of Labor Economics (IZA).
    15. Seamus McGuinness & Konstantinos Pouliakas & Paul Redmond, 2018. "Skills Mismatch: Concepts, Measurement And Policy Approaches," Journal of Economic Surveys, Wiley Blackwell, vol. 32(4), pages 985-1015, September.
    16. Orbay, Benan & Aydede, Yigit, 2015. "Educational mismatch and the cost of underutilization in Turkish labour markets," MPRA Paper 65713, University Library of Munich, Germany.
    17. Chiswick, Barry R. & Miller, Paul W., 2009. "ORU Analyses of Immigrant Earnings in Australia, with International Comparisons," IZA Discussion Papers 4422, Institute of Labor Economics (IZA).
    18. Arnaud Herault, 2019. "Occupational mismatch and network effects: Evidence from France," Post-Print hal-02860040, HAL.
    19. Boll, Christina & Leppin, Julian Sebastian, 2013. "Unterwertige Beschäftigung von Akademikerinnen und Akademikern: Umfang, Ursachen, Einkommenseffekte und Beitrag zur geschlechtsspezifischen Lohnlücke," HWWI Policy Papers 75, Hamburg Institute of International Economics (HWWI).
    20. James Ted McDonald & Maria Rebecca Valenzuela, 2017. "How Does Skills Mismatch Affect Remittances? A Study Of Filipino Migrant Workers," Contemporary Economic Policy, Western Economic Association International, vol. 35(1), pages 216-231, January.

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    More about this item

    Keywords

    rates of return; immigrants; skill; schooling; occupations; earnings;
    All these keywords.

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of 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
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration

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