Arbeitspapier

Earnings Penalty of Educational Mismatch: A Comparison of Alternative Methods of Assessing Over-Education

In this paper we systematically evaluate the impact of using the alternative methods conventionally used in the international literature on the measured incidence of educational mismatch and its earnings effects. We use a rich Australian longitudinal data set for a controlled group of full-time employed workers. Using panel data estimation, we address individual heterogeneity and measurement error, which are important in educational mismatch analysis. We show that alternative methods of measurement result in a range of estimates, with the Mode measure providing the most stable results across instrumental variables (IV) selections in panel fixed effects instrumental variables (FEIV) estimations. Based on the Mode measure, the incidence rate of over-education is 32.3%. The earnings penalty for each year of over-education is 2.5%, which is larger than 0.6% in fixed effect estimation and also larger than 1.9% in OLS estimations.

Sprache
Englisch

Erschienen in
Series: IZA Discussion Papers ; No. 15943

Klassifikation
Wirtschaft
Human Capital; Skills; Occupational Choice; Labor Productivity
Wage Level and Structure; Wage Differentials
Thema
over-education
education mismatch
earnings
measurement error
instrumental variable

Ereignis
Geistige Schöpfung
(wer)
Wen, Le
Maani, Sholeh A.
Ereignis
Veröffentlichung
(wer)
Institute of Labor Economics (IZA)
(wo)
Bonn
(wann)
2023

Handle
Letzte Aktualisierung
10.03.2025, 11:43 MEZ

Datenpartner

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Objekttyp

  • Arbeitspapier

Beteiligte

  • Wen, Le
  • Maani, Sholeh A.
  • Institute of Labor Economics (IZA)

Entstanden

  • 2023

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