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Does Over-education Raise Productivity and Wages Equally ?The Moderating Role of Workers’ Origin and Immigrants’ Background

Author

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  • Valentine Jacobs
  • François Rycx
  • Mélanie Volral

Abstract

We provide first evidence of the impact of over-education, among natives and immigrants, on firm-level productivity and wages. We use Belgian linked panel data and rely on the methodology from Hellerstein et al. (1999) to estimate ORU (over-, required, and under-education) equations aggregated at the firm level. Our results show that the over-education wage premium is higher for natives than for immigrants. However, since the differential in productivity gains associated with over-education between natives and immigrants outweighs the corresponding wage premium differential, we conclude – based on OLS and dynamic GMM-SYS estimates – that over-educated native workers are in fact underpaid to a greater extent than their over-educated immigrant counterparts. This conclusion is refined by sensitivity analyses, when testing the role of immigrants’ background (e.g. region of birth, immigrant generation, age at arrival in the host country, tenure).

Suggested Citation

  • Valentine Jacobs & François Rycx & Mélanie Volral, 2022. "Does Over-education Raise Productivity and Wages Equally ?The Moderating Role of Workers’ Origin and Immigrants’ Background," Working Papers CEB 22-003, ULB -- Universite Libre de Bruxelles.
    • Handle: RePEc:sol:wpaper:2013/340169
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    Cited by:

    1. Richard Fabling & David C Maré & Philip Stevens, 2022. "Migration and firm-level productivity," Working Papers 2022/01, New Zealand Productivity Commission.
    2. Roshnie Doon & Sergio Scicchitano, 2025. "The effects of overeducation on wage distribution in Trinidad and Tobago: an unconditional quantile regression analysis," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 15(1), pages 163-195, March.
    3. Tianzhi Gao & Hui Feng, 2024. "Examining the impact of job matching on workers’ non-cognitive skills: insights from China’s labor market," Humanities and Social Sciences Communications, Palgrave Macmillan, vol. 11(1), pages 1-8, December.
    4. Louise Devos & Louis Lippens & Dries Lens & François Rycx & Mélanie Volral & Stijn Baert, 2025. "Labour Market Disadvantages of Citizens with a Migration Background in Belgium: A Systematic Review," De Economist, Springer, vol. 173(1), pages 121-175, March.

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    Keywords

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    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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