Overeducation at a Glance. Determinants and Wage Effects of the Educational Mismatch Based on AlmaLaurea Data

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. 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 (2012); University of Salerno (2013). We thank all seminar participants and particularly Lilia Costabile, Giuseppe Croce, Hans Dietrich, Francesco Ferrante, Claudio Lucifora, Nadia Netti, Patrizia Ordine, Marco Pecoraro, Claudia Pigini, Giuseppe Rose, Dario Sciulli, Francesca Sgobbi and Peter Sloane for valuable comments on earlier versions of this paper. This notwithstanding, the authors are solely responsible for the opinions expressed in this paper. Terms of use: Documents in2 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.

Effects of Educational Mistmatch on Wages in the Korean Labor Market*

“…After controlling for sample selection bias, the coefficients of years of required and surplus schooling confirm the significance of wage penalties of overeducation or undereducation in the Korean labor market. Our findings are aligned with the previous studies addressing sample selection bias in the estimation of educational mismatch (Cutillo ad Di Pietro, ; Caroleo and Pastore, ). The estimated coefficients of the overeducation in columns (1) and (2) of Table increase by approximately 0.2–0.5 percentage points, compared to the corresponding estimates in columns (2) and (4) of Table , respectively.…”

“…There is a large body of literature using IV methods to control omitted variable bias and measurement errors for the estimation (Groot and Van Den Brink, ; Korpi and Tåhlin, ; Caroleo and Pastore, ; Kleibrink, ). Korpi and Tåhlin () use variables related to childhood circumstances as instruments.…”

“…These include number of siblings, place of residence during childhood, economic problems in the family of origin, and the quarter in the year of an individual's birth. Other studies (Groot and Van Den Brink, ; Caroleo and Pastore, ; Kleibrink, ) use, for example, the educational level of fathers and mothers, and labor market conditions at the respondent's age of 15 as instruments for the three education components.…”

“…A number of recent papers (Nicaise, ; Cutillo and Di Pietro, ; Caroleo and Pastore, ) propose the existence of sample selection bias in the estimation of overeducation given that there are differences in the characteristics of the employed and the unemployed. These differences may affect individuals' choice to work, and, thus, individuals' labor market outcomes.…”

Much Ado about Nothing? The Wage Penalty of Holding a PhD Degree but Not a PhD Job Position

“…The analysis of Ph.D. holders extends the existing literature that investigates the effects of overeducation on wages among university graduates (for recent surveys of this literature, see, among others, Leuven and Oosterbeek, 2011;Pastore, 2013 and. This extension seems particularly appropriate since, considering the time that university students take to get a tertiary degree, the effort they have to make to enter a Ph.D. program and to obtain the Ph.D. title, the question arises of whether they actually get a sufficient reward for the effort made.…”