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The Effect of Overskilling Dynamics on Wages

  • Mavromaras, Kostas G.

    ()

    (NILS, Flinders University)

  • Mahuteau, Stéphane

    ()

    (NILS, Flinders University)

  • Sloane, Peter J.

    ()

    (Swansea University)

  • Wei, Zhang

    ()

    (NILS, Flinders University)

We use a random effects dynamic probit model to estimate the effect of overskilling dynamics on wages. We find that overskilling mismatch is common and more likely among those who have been overskilled in the past. It is also highly persistent, in a manner that is inversely related to educational level. Yet, the wages of university graduates are reduced more by past overskilling, than for any other education level. A possible reason for this wage effect is that graduates tend to be in better-paid jobs and therefore there is more at stake for them if they get it wrong.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6985.

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Length: 37 pages
Date of creation: Nov 2012
Date of revision:
Publication status: published in: Education Economics, 2013, 21 (3), 281-303
Handle: RePEc:iza:izadps:dp6985
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  1. Arulampalam, Wiji & Stewart, Mark B., 2008. "Simplified Implementation of the Heckman Estimator of the Dynamic Probit Model and a Comparison with Alternative Estimators," The Warwick Economics Research Paper Series (TWERPS) 884, University of Warwick, Department of Economics.
  2. Kostas Mavromaras & Seamus McGuinness & Yin King Fok, 2007. "Assessing the Incidence and Wage Effects of Over-skilling in the Australian Labour Market," Melbourne Institute Working Paper Series wp2007n32, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  3. Bell, David & Blanchflower, David, 2010. "Youth Unemployment: Deja Vu?," Stirling Economics Discussion Papers 2010-04, University of Stirling, Division of Economics.
  4. Jeffrey M Wooldridge, 2002. "Simple solutions to the initial conditions problem in dynamic, nonlinear panel data models with unobserved heterogeneity," CeMMAP working papers CWP18/02, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  5. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January.
  6. Mavromaras, Kostas & McGuinness, Seamus & Fok, Yin King, 2009. "Overskilling Dynamics and Education Pathways," Papers WP307, Economic and Social Research Institute (ESRI).
  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, 06.
  8. Mavromaras, Kostas & McGuinness, Seamus & O?Leary, Nigel & Sloane, Peter & Fok, Yin King, 2009. "Job Mismatches and Labour Market Outcomes," Papers WP314, Economic and Social Research Institute (ESRI).
  9. Kostas Mavromaras & Peter Sloane & Zhang Wei, 2012. "The role of education pathways in the relationship between job mismatch, wages and job satisfaction: a panel estimation approach," Education Economics, Taylor & Francis Journals, vol. 20(3), pages 303-321, February.
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