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Wage effects of job-worker mismatches: Heterogeneous skills or institutional effects?

Author

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  • Allen, J.P.

    (Research Centre for Educ and Labour Mark)

  • Badillo-Amador, L.
  • van der Velden, R.K.W.

    (Research Centre for Educ and Labour Mark)

Abstract

The strong wage effects related to mismatches between a worker’s education and that required in the job are usually attributed to assignment theory. This theory asserts that productivity and wages depend on the education-job match, which determines the utilization of skills. However, recent research shows that educational mismatches are only weakly related to skill utilization, which in any case fails to account for the bulk of the wage effects. Two alternative theories have been put forward to explain the observed wage effects. One points to wage setting institutions that cause wages to be based on job characteristics regardless of individual performance, the other to the heterogeneity of skills within a given educational level. Both theories explain existing results, but have never been tested directly. In this paper we show that the former theory explains observed wage effects in the public sector, and the latter theory those in the private sector.

Suggested Citation

  • Allen, J.P. & Badillo-Amador, L. & van der Velden, R.K.W., 2013. "Wage effects of job-worker mismatches: Heterogeneous skills or institutional effects?," Research Memorandum 071, Maastricht University, Graduate School of Business and Economics (GSBE).
    • Handle: RePEc:unm:umagsb:2013071
    DOI: 10.26481/umagsb.2013071
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    Cited by:

    1. Francesca Pantaleone & Roberto Fazioli, 2022. "Lock-In Effects on the Energy Sector: Evidence from Hydrogen Patenting Activities," Energies, MDPI, vol. 15(9), pages 1-15, April.
    2. Nuria S�nchez-S�nchez & Seamus McGuinness, 2015. "Decomposing the impacts of overeducation and overskilling on earnings and job satisfaction: an analysis using REFLEX data," Education Economics, Taylor & Francis Journals, vol. 23(4), pages 419-432, August.
    3. Lucia Mateos & Ines Murillo & Maria del Mar Salinas, 2014. "Desajuste educativo y competencias cognitivas: efectos sobre los salarios," Hacienda Pública Española / Review of Public Economics, IEF, vol. 210(3), pages 85-108, September.
    4. McGuinness, Seamus & Sloane, Peter J., 2011. "Labour market mismatch among UK graduates: An analysis using REFLEX data," Economics of Education Review, Elsevier, vol. 30(1), pages 130-145, February.
    5. Seamus McGuinness & Delma Byrne, 2015. "Born abroad and educated here: examining the impacts of education and skill mismatch among immigrant graduates in Europe," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-30, December.

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    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General

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