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

Effects of Downgrading on Wages: The Case of Young Graduates in the Republic of Congo

“…a 57.1% wage penalty relative to just education. This result is consistent with the results ofJacobs et al (2022) but inconsistent with those ofCultrera et al (2022) andNgassa (2018a). It is explained by assignment theory…”

“…More recently, in 2022, the work of Jacobs et al (2022) and Cultrera (2022) illustrates that this topic remains a major concern in the economics literature. The study by Jacobs et al (2022), carried out using Belgian data covering the period 1999-2016, shows from ordinary least squares (OLS) regression that overeducation has a positive effect on wages. More specifically, an additional year of overeducation increases hourly wages by 8.1% and 5.1% on average for workers who are nationals and immigrants, respectively.…”

“…While this theoretical literature remains controversial, empirical evaluations point to several divergent results. On the one hand, downgrading, in its overeducation component, has a positive impact on wages (Jacobs et al, 2022;Voon & Miller, 2005). On the other hand, undereducation leads to a wage penalty (Voon & Miller, 2005).…”

“…The economic literature on modeling the effects of downgrading on wages generally highlights two types of models. On the one hand, authors use an ordinary least squares (OLS) regression (Marioni, 2017;Cultrera et al, 2022;Jacobs et al, 2022). The OLS method is used once it is assumed beforehand that downgraded individuals are already participating in the labor market, thus can reveal their wages.…”

Migration and Firm-Level Productivity

“…Firms Jacobs et al (2022) look at migration and firm-level productivity focussing on the issue of overeducation, where a worker accepts a job with lower skill requirements than the worker has. Jacobs et al (2022) jointly estimate wage and productivity equations using Belgian matched employer-employee data, supplemented with measures of over-education, to see if the productivity and wage premia obtained by immigrants and natives are similar. They find that the over-education wage premium is higher for natives than for immigrants.…”