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Delayed Graduation and Overeducation: A Test of the Human Capital Model versus the Screening Hypothesis

Author

Listed:
  • Aina, Carmen

    () (University of Piemonte Orientale)

  • Pastore, Francesco

    () (Università della Campania Luigi Vanvitelli)

Abstract

The academic circles are devoting a growing interest to delayed graduation and overeducation, but none has analyzed the joint consequences of these two phenomena. Thus, this paper studies the link between graduation not within the minimum period and overeducation, and the effects of these variables on wages, using the ISFOL-Plus data. According to the human capital model, delayed graduation increases a student' human capital and should, therefore, reduce her probability of being overeducated, while increasing her wage. According to the screening hypothesis, instead, delayed graduation signals low skills and therefore increases the chances of being overeducated, while bearing a wage penalty. The evidence lines towards predictions based on the screening hypothesis. First, delayed graduation increases the chances of overeducation. In addition, the direct wage penalty associated to delayed graduation equals 7% of the median wage. However, being a determinant of overeducation, it also indirectly contributes to the penalty of 19.8% of the median wage associated to overeducation. These effects are sizeable, considering the very low returns to higher education in Italy reported in previous studies.

Suggested Citation

  • Aina, Carmen & Pastore, Francesco, 2012. "Delayed Graduation and Overeducation: A Test of the Human Capital Model versus the Screening Hypothesis," IZA Discussion Papers 6413, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp6413
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    References listed on IDEAS

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    1. Daniele Checchi & Luca Flabbi, 2013. "Intergenerational Mobility and Schooling Decisions in Germany and Italy: The Impact of Secondary School Tracks," Rivista di Politica Economica, SIPI Spa, issue 3, pages 7-57, July-Sept.
    2. Carmen Aina, 2010. "The Determinants of Educational Attainment, University Drop-out and Time-to-Degree. A focus on Italy," Working Papers 132, SEMEQ Department - Faculty of Economics - University of Eastern Piedmont.
    3. Carmen Aina & Lorenzo Cappellari & Marco Francesconi, 2010. "Student Performance may not Improve when Universities are Choosier," CESifo Working Paper Series 3264, CESifo Group Munich.
    4. Brunello, Giorgio & Winter-Ebmer, Rudolf, 2003. "Why do students expect to stay longer in college? Evidence from Europe," Economics Letters, Elsevier, vol. 80(2), pages 247-253, August.
    5. Carmen Aina & Eliana Baici & Giorgia Casalone, 2011. "Time to degree: students' abilities, university characteristics or something else? Evidence from Italy," Education Economics, Taylor & Francis Journals, vol. 19(3), pages 311-325.
    6. repec:ebl:ecbull:v:28:y:2003:i:25:p:a25 is not listed on IDEAS
    7. Floro Ernesto Caroleo & Francesco Pastore, 2012. "Talking about the Pigou paradox: Socio-educational background and educational outcomes of AlmaLaurea," International Journal of Manpower, Emerald Group Publishing, vol. 33(1), pages 27-50, March.
    8. Carmen Aina, 2011. "The Determinants of Success and Failure of Italian University Students. Evidence from administrative data," Rivista Internazionale di Scienze Sociali, Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore, vol. 119(2), pages 85-108.
    9. Sascha O. Becker, 2006. "Introducing Time-to-Educate in a Job-Search Model," Bulletin of Economic Research, Wiley Blackwell, vol. 58(1), pages 61-72, January.
    10. Monks, James, 1997. "The impact of college timing on earnings," Economics of Education Review, Elsevier, vol. 16(4), pages 419-423, October.
    11. Lorenzo Cappellari, 2004. "The Effects Of High School Choices On Academic Performance And Early Labour Market Outcomes," Royal Economic Society Annual Conference 2004 92, Royal Economic Society.
    12. John Bound & Michael F. Lovenheim & Sarah Turner, 2012. "Increasing Time to Baccalaureate Degree in the United States," Education Finance and Policy, MIT Press, vol. 7(4), pages 375-424, September.
    13. Häkkinen, Iida & Uusitalo, Roope, 2003. "The Effect of a Student Aid Reform on Graduation: A Duration Analysis," Working Paper Series 2003:8, Uppsala University, Department of Economics.
    14. Giorgia Casalone & Carmen Aina, 2011. "Does time-to-degree matter? The effect of delayed graduation on employment and wages," Working Papers 38, AlmaLaurea Inter-University Consortium.
    15. Brodaty, Thomas & Gary-Bobo, Robert J. & Prieto, Ana, 2008. "Does Speed Signal Ability? The Impact of Grade Repetitions on Employment and Wages," CEPR Discussion Papers 6832, C.E.P.R. Discussion Papers.
    16. Francesco Pastore & Lia Ambrosio, 2003. "XVIII AIEL Conference," Economics Bulletin, AccessEcon, vol. 28(25), pages 1-25.
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    Citations

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    Cited by:

    1. Caroleo, Floro Ernesto & Pastore, Francesco, 2015. "Overeducation: A Disease of the School-to-Work Transition System," IZA Discussion Papers 9049, Institute for the Study of Labor (IZA).
    2. Floro Ernesto Caroleo & Francesco Pastore, 2012. "Talking about the Pigou paradox: Socio-educational background and educational outcomes of AlmaLaurea," International Journal of Manpower, Emerald Group Publishing, vol. 33(1), pages 27-50, March.
    3. Floro Ernesto Caroleo & Francesco Pastore, 2012. "Overeducation at a glance. Determinants and wage effects of the educational mismatch, looking at the AlmaLaurea data," Discussion Papers 18_2012, CRISEI, University of Naples "Parthenope", Italy.
    4. Marelli Enrico & Sciulli Dario & Signorelli Marcello, 2014. "Skill mismatch of graduates in a local labour market," Экономика региона, CyberLeninka;Федеральное государственное бюджетное учреждение науки «Институт экономики Уральского отделения Российской академии наук», issue 2, pages 181-194.
    5. Domadenik, Polona & Far?nik, Daša & Pastore, Francesco, 2013. "Horizontal Mismatch in the Labour Market of Graduates: The Role of Signalling," IZA Discussion Papers 7527, Institute for the Study of Labor (IZA).
    6. Gaeta, Giuseppe Lucio & Lubrano Lavadera, Giuseppe & Pastore, Francesco, 2016. "Much Ado About Nothing? The Wage Effect of Holding a Ph.D. Degree But Not a Ph.D. Job Position," IZA Discussion Papers 10051, Institute for the Study of Labor (IZA).
    7. Gaeta, Giuseppe Lucio & Lubrano Lavadera, Giuseppe & Pastore, Francesco, 2018. "Overeducation wage penalty among Ph.D. holders. An unconditional quantile regression analysis on Italian data," GLO Discussion Paper Series 180, Global Labor Organization (GLO).
    8. L. Cattani & G. Guidetti & G. Pedrini, 2014. "Assessing the incidence and wage effects of overeducation among Italian graduates using a new measure for educational requirements," Working Papers wp939, Dipartimento Scienze Economiche, Universita' di Bologna.
    9. repec:spr:qualqt:v:51:y:2017:i:6:d:10.1007_s11135-016-0410-6 is not listed on IDEAS
    10. repec:voj:journl:v:63:y:2016:i:1:p:25-43 is not listed on IDEAS
    11. Caroleo, Floro Ernesto & Pastore, Francesco, 2017. "Overeducation at a glance. Determinants and wage effects of the educational mismatch based on AlmaLaurea data," GLO Discussion Paper Series 15, Global Labor Organization (GLO).

    More about this item

    Keywords

    university-to-work transition; delayed graduation; overeducation; human capital theory; screening hypothesis; earnings equations; Italy;

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • I2 - Health, Education, and Welfare - - Education
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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