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Overeducation in the Australian Labour Market : Its Incidence and Effects

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  • Ingrid Linsley

Abstract

Overeducation is a form of labour underutilisation which occurs when the formal education level of a worker exceeds that which is required for the job. It is a form of underemployment that imposes significant costs on individuals and economies. Using data from the Negotiating the Life Course survey this study determines the incidence and effects of overeducation in the Australian labour market. This study found that 27.1 per cent of individuals are overeducated, and the incidence is higher among those who are young, have preschool-aged children, work in large firms and have fewer years of tenure. A positive relationship was also found between timerelated and skill-related underemployment. Overeducation is found to impose costs on individuals, reducing earnings by between 10 and 20 per cent and lowering job satisfaction.

Suggested Citation

  • Ingrid Linsley, 2005. "Overeducation in the Australian Labour Market : Its Incidence and Effects," Department of Economics - Working Papers Series 939, The University of Melbourne.
    • Handle: RePEc:mlb:wpaper:939
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    File URL: http://www.economics.unimelb.edu.au/downloads/wpapers-05/939.pdf
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. 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.
    3. 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.
    4. Kostas Mavromaras & Seamus Mcguinness & Yin King Fok, 2009. "Assessing the Incidence and Wage Effects of Overskilling in the Australian Labour Market," The Economic Record, The Economic Society of Australia, vol. 85(268), pages 60-72, March.
    5. Ingrid Linsley, 2005. "Causes of Overeducation in the Australian Labour Market," Department of Economics - Working Papers Series 940, The University of Melbourne.
    6. Maite Blazquez & Silvio Rendon, 2006. "Over-Education in Multilingual Economies: Evidence from Catalonia," Working Papers 0607, Centro de Investigacion Economica, ITAM.
    7. 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).

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    More about this item

    Keywords

    Overeducation; labour market; education; earnings;
    All these keywords.

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • 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

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