IDEAS home Printed from https://ideas.repec.org/p/zbw/glodps/15.html
   My bibliography  Save this paper

Overeducation at a glance. Determinants and wage effects of the educational mismatch based on AlmaLaurea data

Author

Listed:
  • Caroleo, Floro Ernesto
  • Pastore, Francesco

Abstract

This essay delivers two main innovations with respect to the existing literature. First, and foremost, by extending the work of Nicaise (2010) relative to the reservation wage to the case of overeducation, we propose a statistical test to discriminate between alternative theoretical interpretations of the determinants of overeducation through the Heckman sample selection procedure. Second, the essay provides the first available economic analysis of the consequences of the educational mismatch in Italy as based on AlmaLaurea data, the largest and richest data bank available in the country. The data includes a large number of university graduates enrolled in a given year before the Bologna reform and asks a large number of questions allowing us measuring among others the quality of education from high school. This wealth of information is a condition to provide the most comprehensive, accurate and reliable assessment of overeducation in the country. The educational mismatch 5 years from graduation is relatively high – at 11.4% and 8% for overeducation and overskilling, respectively – by EU standards. Ceteris paribus the parents of the mismatched have lower educational levels according to school tracking. Most humanities and social sciences degrees but also geology, biology and psychology are associated with both types of mismatch. The quality of education also correlates to the educational mismatch. We find a nonconditional wage penalty associated to overeducation and overskilling of 20% and 16% and a conditional one of about 12% and 7%, respectively. The Heckman sample selection model returns a slightly higher sample selection corrected wage penalty, supporting not only the job competition and job assignment models, but also the human capital model. Other concurrent statistical tests point to the difficulty that the educational system faces in providing work-related skills to graduates.

Suggested Citation

  • Caroleo, Floro Ernesto & Pastore, Francesco, 2017. "Overeducation at a glance. Determinants and wage effects of the educational mismatch based on AlmaLaurea data," GLO Discussion Paper Series 15, Global Labor Organization (GLO).
  • Handle: RePEc:zbw:glodps:15
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/155277/1/GLO_DP_0015.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Massimiliano Bratti & Daniele Checchi & Guido De Blasio, 2008. "Does the Expansion of Higher Education Increase the Equality of Educational Opportunities? Evidence from Italy," LABOUR, CEIS, vol. 22(s1), pages 53-88, June.
    2. Manuel F. Bagues & Mauro Sylos Labini, 2009. "Do Online Labor Market Intermediaries Matter? The Impact of "AlmaLaurea" on the University-to-Work Transition," NBER Chapters, in: Studies of Labor Market Intermediation, pages 127-154, National Bureau of Economic Research, Inc.
    3. 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.
    4. James Albrecht & Susan Vroman, 2002. "A Matching Model with Endogenous Skill Requirements," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(1), pages 283-305, February.
    5. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," NBER Chapters, in: Investment in Human Beings, pages 9-49, National Bureau of Economic Research, Inc.
    6. Juan J. Dolado & Marcel Jansen & Juan F. Jimeno, 2009. "On‐the‐Job Search in a Matching Model with Heterogeneous Jobs and Workers," Economic Journal, Royal Economic Society, vol. 119(534), pages 200-228, January.
    7. 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.
    8. 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.
    9. Francesco Pastore, 2015. "The Youth Experience Gap," SpringerBriefs in Economics, Springer, edition 127, number 978-3-319-10196-5, December.
    10. Gaeta, Giuseppe Lucio & Lubrano Lavadera, Giuseppe & Pastore, Francesco, 2016. "Much Ado About Nothing? The Wage Effect of Holding a Ph.D. Degree But Not a Ph.D. Job Position," IZA Discussion Papers 10051, Institute of Labor Economics (IZA).
    11. Bauer, Thomas K., 2002. "Educational mismatch and wages: a panel analysis," Economics of Education Review, Elsevier, vol. 21(3), pages 221-229, June.
    12. Sattinger, Michael, 1993. "Assignment Models of the Distribution of Earnings," Journal of Economic Literature, American Economic Association, vol. 31(2), pages 831-880, June.
    13. Marco Pecoraro, 2014. "Is There Still a Wage Penalty for Being Overeducated But Well-matched in Skills? A Panel Data Analysis of a Swiss Graduate Cohort," LABOUR, CEIS, vol. 28(3), pages 309-337, September.
    14. Séamus McGuinness, 2006. "Overeducation in the Labour Market," Journal of Economic Surveys, Wiley Blackwell, vol. 20(3), pages 387-418, July.
    15. Checchi, Daniele & Ichino, Andrea & Rustichini, Aldo, 1999. "More equal but less mobile?: Education financing and intergenerational mobility in Italy and in the US," Journal of Public Economics, Elsevier, vol. 74(3), pages 351-393, December.
    16. John Ermisch & Robert Wright, 1994. "Interpretation of negative sample selection effects in wage offer equations," Applied Economics Letters, Taylor & Francis Journals, vol. 1(11), pages 187-189.
    17. Carroll, David & Tani, Massimiliano, 2013. "Over-education of recent higher education graduates: New Australian panel evidence," Economics of Education Review, Elsevier, vol. 32(C), pages 207-218.
    18. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, February.
    19. Ariga, Kenn & Brunello, Giorgio, 2007. "Does Secondary School Tracking Affect Performance? Evidence from IALS," IZA Discussion Papers 2643, Institute of Labor Economics (IZA).
    20. Ides Nicaise, 2001. "Human capital, reservation wages and job competition: Heckman's lambda re-interpreted," Applied Economics, Taylor & Francis Journals, vol. 33(3), pages 309-315.
    21. Floro Ernesto Caroleo & Francesco Pastore, 2012. "Talking about the Pigou paradox: Socio-educational background and educational outcomes of AlmaLaurea," International Journal of Manpower, Emerald Group Publishing, vol. 33(1), pages 27-50, March.
    22. Elena Bárcena-Mart�n & Santiago Budr�a & Ana I. Moro-Egido, 2012. "Skill mismatches and wages among European university graduates," Applied Economics Letters, Taylor & Francis Journals, vol. 19(15), pages 1471-1475, October.
    23. 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.
    24. Verhaest, D. & van der Velden, R.K.W., 2010. "Cross-country differences in graduate overeducation and its persistence," ROA Research Memorandum 007, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    25. Giuseppe Lucio Gaeta & Giuseppe Lubrano Lavadera & Francesco Pastore, 2017. "Much Ado about Nothing? The Wage Penalty of Holding a PhD Degree but Not a PhD Job Position," Research in Labor Economics, in: Solomon W. Polachek & Konstantinos Pouliakas & Giovanni Russo & Konstantinos Tatsiramos (ed.), Skill Mismatch in Labor Markets, volume 45, pages 243-277, Emerald Publishing Ltd.
    26. Emilio Congregado & Jesús Iglesias & Jos頍ar, 2016. "Incidence, effects, dynamics and routes out of overqualification in Europe: a comprehensive analysis distinguishing by employment status," Applied Economics, Taylor & Francis Journals, vol. 48(5), pages 411-445, January.
    27. Jan Kleibrink, 2016. "Inept or Badly Matched? — Effects of Educational Mismatch in the Labor Market," LABOUR, CEIS, vol. 30(1), pages 88-108, March.
    28. 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.
    29. Leuven, Edwin & Oosterbeek, Hessel, 2011. "Overeducation and Mismatch in the Labor Market," Handbook of the Economics of Education, in: Erik Hanushek & Stephen Machin & Ludger Woessmann (ed.), Handbook of the Economics of Education, edition 1, volume 4, chapter 0, pages 283-326, Elsevier.
    30. 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.
    31. Fabiano Schivardi & Roberto Torrini, 2010. "Structural change and human capital in the Italian productive system," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 69(3), pages 119-167, December.
    32. 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.
    33. Stijn Baert & Dieter Verhaest, 2019. "Unemployment or Overeducation: Which is a Worse Signal to Employers?," De Economist, Springer, vol. 167(1), pages 1-21, March.
    34. Moulton, Brent R., 1986. "Random group effects and the precision of regression estimates," Journal of Econometrics, Elsevier, vol. 32(3), pages 385-397, August.
    35. Kostas Mavromaras & Peter Sloane & Zhang Wei, 2015. "The scarring effects of unemployment, low pay and skills under-utilization in Australia compared," Applied Economics, Taylor & Francis Journals, vol. 47(23), pages 2413-2429, May.
    36. Etienne Wasmer & Peter Fredriksson & Ana Lamo & Julian Messina & Giovanni Peri, 2005. "The Macroeconomics of Education," Sciences Po publications info:hdl:2441/9064, Sciences Po.
    37. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    38. Floro Ernesto Caroleo & Francesco Pastore, 2007. "The Youth Experience Gap: Explaining Differences across EU Countries," Quaderni del Dipartimento di Economia, Finanza e Statistica 41/2007, Università di Perugia, Dipartimento Economia.
    39. Kostas Mavromaras & Seamus McGuinness & Nigel O'Leary & Peter Sloane & Zhang Wei, 2013. "Job Mismatches and Labour Market Outcomes: Panel Evidence on University Graduates," The Economic Record, The Economic Society of Australia, vol. 89(286), pages 382-395, September.
    40. Giovanna Boccuzzo & Luigi Fabbris & Omar Paccagnella, 2016. "Job-major match and job satisfaction in Italy," International Journal of Manpower, Emerald Group Publishing, vol. 37(1), pages 135-156, April.
    41. Alexander Tarvid, 2015. "The effectiveness of access restriction to higher education in decreasing overeducation," Economic Analysis and Policy, Elsevier, vol. 45(c), pages 11-26.
    42. Patrizia Ordine & Giuseppe Rose, 2009. "Overeducation and Instructional Quality: A Theoretical Model and Some Facts," Journal of Human Capital, University of Chicago Press, vol. 3(1), pages 73-105.
    43. Felix Buchel & Antje Mertens, 2004. "Overeducation, undereducation, and the theory of career mobility," Applied Economics, Taylor & Francis Journals, vol. 36(8), pages 803-816.
    44. Felix Büchel & Andries de Grip & Antje Mertens (ed.), 2003. "Overeducation in Europe," Books, Edward Elgar Publishing, number 3054.
    45. 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.
    46. Aina, Carmen & Pastore, Francesco, 2012. "Delayed Graduation and Overeducation: A Test of the Human Capital Model versus the Screening Hypothesis," IZA Discussion Papers 6413, Institute of Labor Economics (IZA).
    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. Jacek Liwiński & Francesco Pastore, 2021. "Are School-Provided Skills Useful at Work? Results of the Wiles Test," Research in Higher Education, Springer;Association for Institutional Research, vol. 62(1), pages 72-97, February.
    2. Joaquin Turmo-Garuz & M.-Teresa Bartual-Figueras & Francisco-Javier Sierra-Martinez, 2019. "Factors Associated with Overeducation Among Recent Graduates During Labour Market Integration: The Case of Catalonia (Spain)," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 144(3), pages 1273-1301, August.
    3. Pastore, Francesco, 2020. "The quasi-market of employment services in Italy," Journal of Policy Modeling, Elsevier, vol. 42(6), pages 1248-1269.
    4. Gaeta, Giuseppe Lucio & Lubrano Lavadera, Giuseppe & Pastore, Francesco, 2018. "Overeducation wage penalty among Ph.D. holders. An unconditional quantile regression analysis on Italian data," GLO Discussion Paper Series 180, Global Labor Organization (GLO).
    5. Fernando Rios-Avila & Fabiola Saavedra Caballero, 2019. "It Pays to Study for the Right Job: Exploring the Causes and Consequences of Education-Occupation Job Mismatch," Economics Working Paper Archive wp_922, Levy Economics Institute.
    6. Jacek Liwinski, 2019. "Does it pay to study abroad? Evidence from Poland," International Journal of Manpower, Emerald Group Publishing, vol. 40(3), pages 525-555, June.
    7. Ana Isabel Moro-Egido, 2020. "Gender Differences in Skill Mismatches," Hacienda Pública Española / Review of Public Economics, IEF, vol. 235(4), pages 29-60, December.
    8. Yaroslav Kuzminov & Pavel Sorokin & Isak Froumin, 2019. "Generic and Specific Skills as Components of Human Capital: New Challenges for Education Theory and Practice," Foresight and STI Governance (Foresight-Russia till No. 3/2015), National Research University Higher School of Economics, vol. 13(2), pages 19-41.
    9. Floro Ernesto Caroleo & Francesco Pastore, 2019. "The Italian lowgrowth conundrum: An assessment and some policy lessons," CESifo Forum, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 20(01), pages 33-39, April.
    10. Esposito, Piero & Scicchitano, Sergio, 2020. "Educational mismatches, technological change and unemployment: evidence from secondary and tertiary educated workers," GLO Discussion Paper Series 465, Global Labor Organization (GLO).
    11. Carmen Aina & Francesco Pastore, 2020. "Delayed Graduation and Overeducation in Italy: A Test of the Human Capital Model Versus the Screening Hypothesis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 152(2), pages 533-553, November.
    12. Sam Jones & Ricardo Santos & Gimelgo Xirinda, 2020. "Misinformed, mismatched, or misled?: Explaining the gap between expected and realized graduate earnings in Mozambique," WIDER Working Paper Series wp-2020-47, World Institute for Development Economic Research (UNU-WIDER).
    13. Marta Palczyñska, 2020. "Overeducation and wages: the role of cognitive skills and personality traits," IBS Working Papers 03/2020, Instytut Badan Strukturalnych.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Caroleo, Floro Ernesto & Pastore, Francesco, 2015. "Overeducation: A Disease of the School-to-Work Transition System," IZA Discussion Papers 9049, Institute of Labor Economics (IZA).
    2. Floro Ernesto Caroleo & Francesco Pastore, 2012. "Overeducation at a glance. Determinants and wage effects of the educational mismatch, looking at the AlmaLaurea data," Discussion Papers 18_2012, CRISEI, University of Naples "Parthenope", Italy.
    3. Sandra Nieto & Raul Ramos, 2017. "Overeducation, Skills and Wage Penalty: Evidence for Spain Using PIAAC Data," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 134(1), pages 219-236, October.
    4. Kampelmann, Stephan & Rycx, François, 2012. "The impact of educational mismatch on firm productivity: Evidence from linked panel data," Economics of Education Review, Elsevier, vol. 31(6), pages 918-931.
    5. Juan Acosta-Ballesteros & María del Pilar Osorno-del Rosal & Olga María Rodríguez-Rodríguez, 2018. "Overeducation of Young Workers in Spain: How Much Does the First Job Matter? Social Indicators Research," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 138(1), pages 109-139, July.
    6. Morsy, Hanan & Mukasa, Adamon, 2019. "Youth Jobs, Skill and Educational Mismatches in Africa," MPRA Paper 100394, University Library of Munich, Germany.
    7. Inmaculada García-Mainar & Víctor M. Montuenga-Gómez, 2017. "Subjective educational mismatch and signalling in Spain," Documentos de Trabajo dt2017-03, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.
    8. L. Cattani & G. Guidetti & G. Pedrini, 2014. "Assessing the incidence and wage effects of overeducation among Italian graduates using a new measure for educational requirements," Working Papers wp939, Dipartimento Scienze Economiche, Universita' di Bologna.
    9. Hanan Morsy & Adamon N. Mukasa, 2019. "Working Paper 326 - Youth Jobs, Skill and Educational Mismatches in Africa," Working Paper Series 2452, African Development Bank.
    10. Meroni, Elena Claudia & Vera-Toscano, Esperanza, 2017. "The persistence of overeducation among recent graduates," Labour Economics, Elsevier, vol. 48(C), pages 120-143.
    11. Marco Pecoraro, 2014. "Is There Still a Wage Penalty for Being Overeducated But Well-matched in Skills? A Panel Data Analysis of a Swiss Graduate Cohort," LABOUR, CEIS, vol. 28(3), pages 309-337, September.
    12. Sucharita Ghosh & Emanuele Grassi, 2020. "Overeducation and overskilling in the early careers of PhD graduates: Does international migration reduce labour market mismatch?," Papers in Regional Science, Wiley Blackwell, vol. 99(4), pages 915-944, August.
    13. 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.
    14. Hanol Lee & Jong‐Wha Lee & Eunbi Song, 2016. "Effects of Educational Mistmatch on Wages in the Korean Labor Market," Asian Economic Journal, East Asian Economic Association, vol. 30(4), pages 375-400, December.
    15. Iñaki Iriondo & Teodosio Pérez-Amaral, 2013. "The Effect of Educational Mismatch on Wages Using European Panel Data," Working Papers 700, Queen Mary University of London, School of Economics and Finance.
    16. Joaquin Turmo-Garuz & M.-Teresa Bartual-Figueras & Francisco-Javier Sierra-Martinez, 2019. "Factors Associated with Overeducation Among Recent Graduates During Labour Market Integration: The Case of Catalonia (Spain)," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 144(3), pages 1273-1301, August.
    17. Christina Boll & Julian Sebastian Leppin, 2016. "Differential Overeducation in East and West Germany: Extending Frank's Theory on Economic Returns Changes the Picture of Disadvantaged Women," LABOUR, CEIS, vol. 30(4), pages 455-504, December.
    18. Daniel Erdsiek, 2016. "Overqualification of graduates: assessing the role of family background [Überqualifikation von Hochschulabsolventen: Welche Rolle spielt der familiäre Hintergrund?]," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 49(3), pages 253-268, November.
    19. Luca Cattani & Giovanni Guidetti & Giulio Pedrini, 2018. "Overeducation among Italian graduates: do different measures diverge?," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 35(2), pages 491-521, August.
    20. Iñaki Iriondo & Teodosio Pérez-Amaral, 2013. "The Effect of Educational Mismatch on Wages Using European Panel Data," Working Papers 700, Queen Mary University of London, School of Economics and Finance.

    More about this item

    Keywords

    University-to-work transition; educational mismatch; sample selection bias; AlmaLaurea; Italy;
    All these keywords.

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • I2 - Health, Education, and Welfare - - Education
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

    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:zbw:glodps:15. 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: . General contact details of provider: https://edirc.repec.org/data/glabode.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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/glabode.html .

    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.