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Walking Wounded – The Causal Welfare Loss of Underemployment through Overeducation

  • John P. Haisken-DeNew
  • Jan Kleibrink

    ()

Using data from the SOEP, we analyze the wellbeing impact of underemployment through overeducation to examine a broader definition of employment loss. Persons leaving a job through exogenous reasons but entering directly into immediate employment may not find a perfect employment match and cannot use their skills fully in the new job. We demonstrate that a „downchange“, although welfare reducing, may be more desirable than suffering the large welfare losses associated with unemployment whilst searching for a more suitable job match. Nonetheless, underemployed persons do not enter into the official job statistics, whilst their welfare loss due to „downchange“ is approximately 50% of the welfare loss of entry into unemployment.

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Paper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen in its series Ruhr Economic Papers with number 0423.

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Length: 22 pages
Date of creation: Jul 2013
Date of revision:
Handle: RePEc:rwi:repape:0423
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  1. Andrew E. Clark, 2003. "Unemployment as a Social Norm: Psychological Evidence from Panel Data," Journal of Labor Economics, University of Chicago Press, vol. 21(2), pages 289-322, April.
  2. Ada Ferrer-i-Carbonell & Paul Frijters, 2004. "How Important is Methodology for the estimates of the determinants of Happiness?," Economic Journal, Royal Economic Society, vol. 114(497), pages 641-659, 07.
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  4. 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.
  5. Sicherman, Nachum, 1991. ""Overeducation" in the Labor Market," Journal of Labor Economics, University of Chicago Press, vol. 9(2), pages 101-22, April.
  6. Battu, H. & Belfield, C. R. & Sloane, P. J., . "Overeducation Among Graduates: A Cohort View," Working Papers 98-03, Department of Economics, University of Aberdeen.
  7. 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.
  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. Michael Kind & John P. Haisken-DeNew, 2012. "Unexpected Victims: How Parents' Unemployment Affects Their Children's Life Satisfaction," Melbourne Institute Working Paper Series wp2012n02, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  10. Bruno S. Frey & Alois Stutzer, 2001. "What Can Economists Learn from Happiness Research?," CESifo Working Paper Series 503, CESifo Group Munich.
  11. Winkelmann, Liliana & Winkelmann, Rainer, 1998. "Why Are the Unemployed So Unhappy? Evidence from Panel Data," Economica, London School of Economics and Political Science, vol. 65(257), pages 1-15, February.
  12. Bauer, Thomas K., 2002. "Educational mismatch and wages: a panel analysis," Economics of Education Review, Elsevier, vol. 21(3), pages 221-229, June.
  13. Claudia Senik, 2005. "Income distribution and well-being: what can we learn from subjective data?," Journal of Economic Surveys, Wiley Blackwell, vol. 19(1), pages 43-63, 02.
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