The Effect of Over-education and Overskilling on Economic Growth across States in Malaysia: An Empirical Evidence

Abstract

This paper explores the incidence and the outcome of educational and skill mismatchoneconomic growth across state in Malaysia from2006 and 2012.The mismatch indicators were gauged using the Job Analysis (JA) and the mode method.Using micro cross-section data from Labour Force Survey (LFS) between 2006 and 2012, overqualification (underqualification)and overskilling (underskilling) were reported between13 (20) and 19 (34) percent.Results for Fixed Effect (FE) regression demonstrated overqualification and overskilling had a favourable impact on regional growth. By contrast, the growth was negatively associated with an increase in undereducation and underskilling incidence. The findings depict that the economic performance at the regional level in Malaysia is associated with an increase in overqualification and overskilling. The presence of such incidence, therefore, may not be a sign of inefficient public investment and resources allocated to education are in fact economically beneficial at a macro-level.