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Overeducation in the Australian Labour Market : Its Incidence and Effects

  • Ingrid Linsley
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    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.

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    Paper provided by The University of Melbourne in its series Department of Economics - Working Papers Series with number 939.

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    Length: 30 pages
    Date of creation: 2005
    Date of revision:
    Handle: RePEc:mlb:wpaper:939
    Contact details of provider: Postal: Department of Economics, The University of Melbourne, 4th Floor, FBE Building, Level 4, 111 Barry Street. Victoria, 3010, Australia
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    8. Hersch, Joni, 1991. "Education Match and Job Match," The Review of Economics and Statistics, MIT Press, vol. 73(1), pages 140-44, February.
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    17. P. J. Sloane & H. Battu & P. T. Seaman, 1999. "Overeducation, undereducation and the British labour market," Applied Economics, Taylor & Francis Journals, vol. 31(11), pages 1437-1453.
    18. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, Oxford University Press, vol. 87(3), pages 355-374.
    19. P. J. Sloane & H. Battu & P. T. Seaman, 1996. "Overeducation and the formal education/experience and training trade-off," Applied Economics Letters, Taylor & Francis Journals, vol. 3(8), pages 511-515.
    20. Alfonso Alba-Ramírez, 1993. "Mismatch in the Spanish Labor Market: Overeducation?," Journal of Human Resources, University of Wisconsin Press, vol. 28(2), pages 259-278.
    21. Battu, Harminder & Sloane, Peter J., 2002. "Overeducation and Ethnic Minorities in Britain," IZA Discussion Papers 650, Institute for the Study of Labor (IZA).
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