IDEAS home Printed from https://ideas.repec.org/p/red/sed014/400.html
   My bibliography  Save this paper

Career Prospects of Overeducated Americans

Author

Listed:
  • Brian Clark
  • Arnaud Maurel

    (Duke University)

  • Clement Joubert

    (University of North Carolina at Chapel H)

Abstract

In this paper we analyze career dynamics for the nearly 30% of U.S. workers who are deemed overeducated in the literature. We use data from the National Longitudinal Survey of Youth 1979 combined with the pooled 1989-1991 waves of the Current Population Survey to analyze overeducation status transitions and the corresponding effects on wages. We find that overeducation is a persistent phenomenon at the aggregate and individual levels, with 73% of workers remaining overeducated after one year. Further, the hazard rate out of overeducation drops by about 60% during the first 5 years spent overeducated. However, the estimation of a mixed proportional hazard model suggests that this is attributable to selection on unobservables rather than true duration dependence. Finally, overeducation is associated with lower current as well as future wages, which points to the existence of scarring effects.

Suggested Citation

  • Brian Clark & Arnaud Maurel & Clement Joubert, 2014. "Career Prospects of Overeducated Americans," 2014 Meeting Papers 400, Society for Economic Dynamics.
  • Handle: RePEc:red:sed014:400
    as

    Download full text from publisher

    File URL: https://economicdynamics.org/meetpapers/2014/paper_400.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. 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.
    2. Arnaud Chevalier & Joanne Lindley, 2009. "Overeducation and the skills of UK graduates," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 172(2), pages 307-337, April.
    3. Pedro Carneiro & Karsten T. Hansen & James J. Heckman, 2003. "Estimating Distributions of Treatment Effects with an Application to the Returns to Schooling and Measurement of the Effects of Uncertainty on College," NBER Working Papers 9546, National Bureau of Economic Research, Inc.
    4. Allen, Jim & van der Velden, Rolf, 2001. "Educational Mismatches versus Skill Mismatches: Effects on Wages, Job Satisfaction, and On-the-Job Search," Oxford Economic Papers, Oxford University Press, vol. 53(3), pages 434-452, July.
    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. McLaughlin, Kenneth J & Bils, Mark, 2001. "Interindustry Mobility and the Cyclical Upgrading of Labor," Journal of Labor Economics, University of Chicago Press, vol. 19(1), pages 94-135, January.
    7. Bauer, Thomas K., 2002. "Educational mismatch and wages: a panel analysis," Economics of Education Review, Elsevier, vol. 21(3), pages 221-229, June.
    8. Kiker, B. F. & Santos, Maria C. & de Oliveira, M. Mendes, 1997. "Overeducation and undereducation: Evidence for Portugal," Economics of Education Review, Elsevier, vol. 16(2), pages 111-125, April.
    9. Kahn, Lisa B., 2010. "The long-term labor market consequences of graduating from college in a bad economy," Labour Economics, Elsevier, vol. 17(2), pages 303-316, April.
    10. Carneiro, Pedro & Hansen, Karsten T. & Heckman, James J., 2003. "Estimating Distributions of Treatment Effects with an Application to the Returns to Schooling and Measurement of the Effects of Uncertainty on College Choice," IZA Discussion Papers 767, Institute of Labor Economics (IZA).
    11. Joseph G. Altonji & Lisa B. Kahn & Jamin D. Speer, 2016. "Cashier or Consultant? Entry Labor Market Conditions, Field of Study, and Career Success," Journal of Labor Economics, University of Chicago Press, vol. 34(S1), pages 361-401.
    12. Richard R. Verdugo & Naomi Turner Verdugo, 1989. "The Impact of Surplus Schooling on Earnings: Some Additional Findings," Journal of Human Resources, University of Wisconsin Press, vol. 24(4), pages 629-643.
    13. Pedro Carneiro & Karsten T. Hansen & James J. Heckman, 2003. "2001 Lawrence R. Klein Lecture Estimating Distributions of Treatment Effects with an Application to the Returns to Schooling and Measurement of the Effects of Uncertainty on College Choice," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(2), pages 361-422, May.
    14. 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.
    15. Kostas Mavromaras & Stéphane Mahuteau & Peter Sloane & Zhang Wei, 2013. "The effect of overskilling dynamics on wages," Education Economics, Taylor & Francis Journals, vol. 21(3), pages 281-303, July.
    16. Peter Gottschalk & Michael Hansen, 2003. "Is the Proportion of College Workers in Noncollege Jobs Increasing?," Journal of Labor Economics, University of Chicago Press, vol. 21(2), pages 409-448, April.
    17. Hartog, Joop, 1980. "Earnings and Capability Requirements," The Review of Economics and Statistics, MIT Press, vol. 62(2), pages 230-240, May.
    18. Christian Belzil & Jörgen Hansen, 2002. "Unobserved Ability and the Return to Schooling," Econometrica, Econometric Society, vol. 70(5), pages 2075-2091, September.
    19. Clement Joubert, 2015. "Pension Design With A Large Informal Labor Market: Evidence From Chile," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 56, pages 673-694, May.
    20. Johannes F. Schmieder & Till von Wachter & Stefan Bender, 2013. "The Causal Effect of Unemployment Duration on Wages: Evidence from Unemployment Insurance Extensions," NBER Working Papers 19772, National Bureau of Economic Research, Inc.
    21. D’Haultfœuille, Xavier & Maurel, Arnaud, 2013. "Inference on an extended Roy model, with an application to schooling decisions in France," Journal of Econometrics, Elsevier, vol. 174(2), pages 95-106.
    22. Philip Oreopoulos & Till von Wachter & Andrew Heisz, 2012. "The Short- and Long-Term Career Effects of Graduating in a Recession," American Economic Journal: Applied Economics, American Economic Association, vol. 4(1), pages 1-29, January.
    23. Glaeser, Edward L & Mare, David C, 2001. "Cities and Skills," Journal of Labor Economics, University of Chicago Press, vol. 19(2), pages 316-342, April.
    24. Liu, Kai & Salvanes, Kjell G. & Sørensen, Erik Ø., 2016. "Good skills in bad times: Cyclical skill mismatch and the long-term effects of graduating in a recession," European Economic Review, Elsevier, vol. 84(C), pages 3-17.
    25. H. Battu & C. R. Belfield & P. J. Sloane, 1999. "Overeducation Among Graduates: a cohort view," Education Economics, Taylor & Francis Journals, vol. 7(1), pages 21-38.
    26. Sicherman, Nachum & Galor, Oded, 1990. "A Theory of Career Mobility," Journal of Political Economy, University of Chicago Press, vol. 98(1), pages 169-192, February.
    27. Rubb, Stephen, 2003. "Overeducation: a short or long run phenomenon for individuals?," Economics of Education Review, Elsevier, vol. 22(4), pages 389-394, August.
    28. Sang Yoon Lee & Yongseok Shin & Donghoon Lee, 2015. "The Option Value of Human Capital: Higher Education and Wage Inequality," NBER Working Papers 21724, National Bureau of Economic Research, Inc.
    29. Hersch, Joni, 1991. "Education Match and Job Match," The Review of Economics and Statistics, MIT Press, vol. 73(1), pages 140-144, February.
    30. Korpi, Tomas & Tåhlin, Michael, 2009. "Educational mismatch, wages, and wage growth: Overeducation in Sweden, 1974-2000," Labour Economics, Elsevier, vol. 16(2), pages 183-193, April.
    31. Russell W. Rumberger, 1987. "The Impact of Surplus Schooling on Productivity and Earnings," Journal of Human Resources, University of Wisconsin Press, vol. 22(1), pages 24-50.
    32. Dieter Verhaest & Eddy Omey, 2006. "The Impact of Overeducation and its Measurement," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 77(3), pages 419-448, July.
    33. Heckman, James & Singer, Burton, 1984. "A Method for Minimizing the Impact of Distributional Assumptions in Econometric Models for Duration Data," Econometrica, Econometric Society, vol. 52(2), pages 271-320, March.
    34. Kory Kroft & Fabian Lange & Matthew J. Notowidigdo, 2013. "Duration Dependence and Labor Market Conditions: Evidence from a Field Experiment," The Quarterly Journal of Economics, Oxford University Press, vol. 128(3), pages 1123-1167.
    35. 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.
    36. Ronni Pavan, 2011. "Career Choice and Wage Growth," Journal of Labor Economics, University of Chicago Press, vol. 29(3), pages 549-587.
    37. Joanne Lindley & Steven McIntosh, 2008. "A Panel Data Analysis of the Incidence and Impact of Over-education," Working Papers 2008009, The University of Sheffield, Department of Economics, revised Jul 2008.
    38. Groeneveld, Sandra & Hartog, Joop, 2004. "Overeducation, wages and promotions within the firm," Labour Economics, Elsevier, vol. 11(6), pages 701-714, December.
    39. Johannes F. Schmieder & Till von Wachter & Stefan Bender, 2016. "The Effect of Unemployment Benefits and Nonemployment Durations on Wages," American Economic Review, American Economic Association, vol. 106(3), pages 739-777, March.
    40. Baert, Stijn & Cockx, Bart & Verhaest, Dieter, 2013. "Overeducation at the start of the career: Stepping stone or trap?," Labour Economics, Elsevier, vol. 25(C), pages 123-140.
    41. Frenette, Marc, 2004. "The overqualified Canadian graduate: the role of the academic program in the incidence, persistence, and economic returns to overqualification," Economics of Education Review, Elsevier, vol. 23(1), pages 29-45, February.
    42. Hartog, Joop & Oosterbeek, Hessel, 1988. "Education, allocation and earnings in the Netherlands: 0verschooling?," Economics of Education Review, Elsevier, vol. 7(2), pages 185-194, April.
    43. 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 360-373, June.
    44. Shintaro Yamaguchi, 2012. "Tasks and Heterogeneous Human Capital," Journal of Labor Economics, University of Chicago Press, vol. 30(1), pages 1-53.
    45. Chris Elbers & Geert Ridder, 1982. "True and Spurious Duration Dependence: The Identifiability of the Proportional Hazard Model," Review of Economic Studies, Oxford University Press, vol. 49(3), pages 403-409.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Peter Cappelli, 2014. "Skill Gaps, Skill Shortages and Skill Mismatches: Evidence for the US," NBER Working Papers 20382, National Bureau of Economic Research, Inc.
    2. Jan Baran, 2019. "Is expansion of overeducation cohort-driven? Evidence from Poland," Working Papers 2019-13, Faculty of Economic Sciences, University of Warsaw.
    3. Sang Yoon Lee & Yongseok Shin & Donghoon Lee, 2015. "The Option Value of Human Capital: Higher Education and Wage Inequality," NBER Working Papers 21724, National Bureau of Economic Research, Inc.
    4. Erdsiek, Daniel, 2017. "Dynamics of overqualification: Evidence from the early career of graduates," ZEW Discussion Papers 17-020, ZEW - Leibniz Centre for European Economic Research.
    5. Chen, Sonja, 2016. "Adverse selection in the labour market and the demand for vocational education," CLEF Working Paper Series 3, Canadian Labour Economics Forum (CLEF), University of Waterloo.
    6. Redmond, Paul & Whelan, Adele, 2017. "Educational Attainment and Skill Utilization in the Irish Labour Market: An EU Comparison," Quarterly Economic Commentary: Special Articles, Economic and Social Research Institute (ESRI).
    7. McQuinn, Kieran & O'Toole, Conor & Economides, Philip & Monteiro, Teresa, 2017. "Quarterly Economic Commentary, Winter 2017," Forecasting Report, Economic and Social Research Institute (ESRI), number QEC20174, February.
    8. Ammar Farooq, 2016. "The U-shape of Over-education? Human Capital Dynamics & Occupational Mobility over the Lifecycle," 2016 Papers pfa484, Job Market Papers.
    9. Seamus McGuinness & Konstantinos Pouliakas & Paul Redmond, 2018. "Skills Mismatch: Concepts, Measurement And Policy Approaches," Journal of Economic Surveys, Wiley Blackwell, vol. 32(4), pages 985-1015, September.
    10. Andrew Agopsowicz & Chris Robinson & Ralph Stinebrickner & Todd Stinebrickner, 2017. "Careers and Mismatch for College Graduates: College and Non-college Jobs," University of Western Ontario, Centre for Human Capital and Productivity (CHCP) Working Papers 20174, University of Western Ontario, Centre for Human Capital and Productivity (CHCP).
    11. Pugno, Maurizio, 2016. "Beyond the distinction between necessaries and luxuries," MPRA Paper 73729, University Library of Munich, Germany.
    12. Junankar, Pramod N. (Raja), 2014. "The Impact of the Global Financial Crisis on Youth Labour Markets," IZA Discussion Papers 8400, Institute of Labor Economics (IZA).

    More about this item

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:red:sed014:400. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christian Zimmermann). General contact details of provider: http://edirc.repec.org/data/sedddea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.