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Causes of Overeducation in the Australian Labour Market

  • 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. In Australia close to 30 per cent of workers are overeducated and are underutilising their skills. Using data from the Negotiating the Life Course survey, this study determines the causes of overeducation in Australia. Four of the key theories that have been used to explain overeducation are tested: human capital, job competition, assignment and the career mobility theories. Tests show that the job competition model best explains the existence of overeducation in the Australian labour market.

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    Paper provided by The University of Melbourne in its series Department of Economics - Working Papers Series with number 940.

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    Length: 28 pages
    Date of creation: 2005
    Date of revision:
    Handle: RePEc:mlb:wpaper:940
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    1. Dolton, Peter & Vignoles, Anna, 2000. "The incidence and effects of overeducation in the U.K. graduate labour market," Economics of Education Review, Elsevier, vol. 19(2), pages 179-198, April.
    2. John Robst, 1995. "Career Mobility, Job Match, and Overeducation," Eastern Economic Journal, Eastern Economic Association, vol. 21(4), pages 539-550, Fall.
    3. Spence, A Michael, 1973. "Job Market Signaling," The Quarterly Journal of Economics, MIT Press, vol. 87(3), pages 355-74, August.
    4. Parvinder Kler, 2005. "Graduate overeducation in Australia: A comparison of the mean and objective methods," Education Economics, Taylor & Francis Journals, vol. 13(1), pages 47-72.
    5. 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.
    6. Ingrid Linsley, 2005. "Overeducation in the Australian Labour Market : Its Incidence and Effects," Department of Economics - Working Papers Series 939, The University of Melbourne.
    7. Frank, Robert H, 1978. "Why Women Earn Less: The Theory and Estimation of Differential Overqualification," American Economic Review, American Economic Association, vol. 68(3), pages 360-73, June.
    8. Hartog, Joop, 2000. "Over-education and earnings: where are we, where should we go?," Economics of Education Review, Elsevier, vol. 19(2), pages 131-147, April.
    9. Tsang, Mun C. & Levin, Henry M., 1985. "The economics of overeducation," Economics of Education Review, Elsevier, vol. 4(2), pages 93-104, April.
    10. Duncan, Greg J. & Hoffman, Saul D., 1981. "The incidence and wage effects of overeducation," Economics of Education Review, Elsevier, vol. 1(1), pages 75-86, February.
    11. Hartog, Joop, 1986. "Allocation and the Earnings Function," Empirical Economics, Springer, vol. 11(2), pages 97-110.
    12. Nachum Sicherman, 1987. "Over-Education in the Labor Market," University of Chicago - George G. Stigler Center for Study of Economy and State 48, Chicago - Center for Study of Economy and State.
    13. Sattinger, Michael, 1993. "Assignment Models of the Distribution of Earnings," Journal of Economic Literature, American Economic Association, vol. 31(2), pages 831-80, June.
    14. Arnaud Chevalier, 2003. "Measuring Over-education," Economica, London School of Economics and Political Science, vol. 70(279), pages 509-531, 08.
    15. Hersch, Joni, 1991. "Education Match and Job Match," The Review of Economics and Statistics, MIT Press, vol. 73(1), pages 140-44, February.
    16. Groot, Wim & Maassen van den Brink, Henriette, 2000. "Overeducation in the labor market: a meta-analysis," Economics of Education Review, Elsevier, vol. 19(2), pages 149-158, April.
    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. Mendes de Oliveira, M. & Santos, M. C. & Kiker, B. F., 2000. "The role of human capital and technological change in overeducation," Economics of Education Review, Elsevier, vol. 19(2), pages 199-206, April.
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