The impact of underutilization of education on productivity: A case study of the U.S. Bell companies

Tsang, Mun C.

doi:10.1016/0272-7757(87)90003-3

Cited by 159 publications

(119 citation statements)

References 11 publications

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“…Moreover, less-qualified workers may be displaced and 'bumped down' in the labour market, or into unemployment, by over-educated workers moving into their occupations, particularly in slack labour markets (Battu and Sloane, 2002). At the level of the organisations, there is some evidence to suggest that overeducation may be associated with lower productivity (Tsang, 1987) and higher labour turnover, leading in turn to lost investments in recruitment and training (Tsang et al, 1991;Alba-Ramirez, 1993). At the macroeconomic level, overeducation can entail wastage of investment in education and national output is potentially lower than it could be if the skills of overeducated works were fully utilized.…”

Section: Determinants Of Regional Differences In Rates Of Overeducatimentioning

confidence: 99%

Determinants of regional differences in rates of overeducation in Europe

Rodríguez

McGuinness

O’Connell

2017

Social Science Research

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This paper examines the factors determining variations in spatial rates of overeducation.A quantile regression model has been implemented on a sample of region-yearly data drawn from the EU Survey on Income and Living Conditions (EU-SILC) and several institutional and macroeconomic features captured from other data-sets. Potential determinants of overeducation rates include factors such as labour market risk, financial aid to university students, excess labour demand and institutional factors. We find significant effects both for labour market structural imbalances and institutional factors.The research supports the findings of micro based studies which have found that overeducation is consistent with an assignment interpretation of the labour market.Keywords: Overeducation, regional variation, mismatch JEL classification: C29; I21; J24 Highlights: Overeducation reacts to educated labour supply excess and university enrolment levels  There is limited evidence that overeducation is driven by high returns to education  Overeducation is explained by migration-and sectoral composition of employment  Structural factors play a significant role in determining overeducation rates

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Section: Determinants Of Regional Differences In Rates Of Overeducatimentioning

confidence: 99%

Determinants of regional differences in rates of overeducation in Europe

Rodríguez

McGuinness

O’Connell

2017

Social Science Research

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“…The first trend of research relies on human capital theory, which infers the effects of over-and under-education on productivity through their effects on wages (Battu et al 1999;Duncan and Hoffman 1981;Rumberger 1987;Mavromaras et al 2010;Sicherman 1991;Van der Meer 2006). The second trend studies the influence of educational mismatch on job satisfaction and other correlates of workers' productivity (Büchel 2002;Green and Zhu 2010;Hersch 1991;Tsang 1987;Tsang et al 1991;Omey 2006, 2009). …”

Section: Introductionmentioning

confidence: 99%

“…However, using the same (but extended) dataset on Flanders, they find, in 2009, a significant negative impact of over-education on job satisfaction but also find that the negative consequence of over-education on job satisfaction decreases with the number of years of experience. Tsang (1987) investigates the effect of over-education on job satisfaction but also constructs a firm-level job-satisfaction index in his study and estimates its effect on firm productivity through a Cobb-Douglas production function. He finds that over-education impacts job satisfaction negatively, but also that job satisfaction is positively and significantly correlated to output, concluding that over-education impacts the worker's productivity negatively.…”

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confidence: 99%

Educational Mismatch and Firm Productivity: Do Skills, Technology and Uncertainty Matter?

2015

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The authors provide first evidence on whether the direct relationship between educational mismatch and firm productivity varies across working environments. Using detailed Belgian linked employer-employee panel data for 1999-2010, they find the existence of a significant, positive (negative) impact of over-(under-)education on firm productivity. Moreover, their results show that the effect of over-education on productivity is stronger among firms: (i) with a higher share of high-skilled jobs, (ii) belonging to high-tech/knowledge-intensive industries, and (iii) evolving in a more uncertain economic environment. Interaction effects between under-education and working environments are less clear-cut. However, economic uncertainty is systematically found to accentuate the detrimental effect of under-education on productivity.Keywords: Educational mismatch, productivity, linked employer-employee panel data, working environments. AbstractThe authors provide first evidence on whether the direct relationship between educational mismatch and firm productivity varies across working environments. Using detailed Belgian linked employer-employee panel data for 1999-2010, they find the existence of a significant, positive (negative) impact of over-(under-)education on firm productivity. Moreover, their results show that the effect of over-education on productivity is stronger among firms: (i) with a higher share of high-skilled jobs, (ii) belonging to high-tech/knowledge-intensive industries, and (iii) evolving in a more uncertain economic environment. Interaction effects between under-education and working environments are less clear-cut. However, economic uncertainty is systematically found to accentuate the detrimental effect of under-education on productivity.

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“…They generally indicate that over-educated workers have a lower level of job satisfaction, receive less training and are more likely to quit their jobs than their adequately educated former classmates, i.e. individuals with the same attained education (Ahn et al, 2001, Allen and van der Velden, 2001, Battu et al, 2000, Büchel and Mertens, 2004, Feldman and Turnley, 1995, Sicherman, 1991, Tsang, 1987, van Smoorenburg and van der Velden, 2000, Verhaest and Omey, 2006, Vieira, 2005. These results suggest that over-education is likely to induce negative productivity costs for firms (due to higher turnover rates) and the overall economy (due to a lower level of job satisfaction and less training participation).…”

Section: Introductionmentioning

confidence: 99%

“…Finally, their results indicate that the negative consequence of overeducation on satisfaction diminishes with years of work experience. In contrast to the above mentioned literature, Tsang (1987) does not only investigate the effect of over-education on job satisfaction but he also constructs a firm-level job-satisfaction index and estimates the latter's impact on firm productivity using a Cobb-Douglas production function. His results, based on individual-and firm-level data from twenty-two U.S. Bell companies for the period 1981-1982, indicate that over-education is significantly and negatively related to job satisfaction, which is in turn positively and significantly related to output.…”

Section: Introductionmentioning

confidence: 99%

The impact of educational mismatch on firm productivity: Evidence from linked panel data

Kampelmann

Rycx

2012

Economics of Education Review

120

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We provide first evidence regarding the direct impact of educational mismatch on firm productivity. To do so, we rely on representative linked employer-employee panel data for Belgium covering the period 1999-2006. Controlling for simultaneity issues, time-invariant unobserved workplace characteristics, cohort effects and dynamics in the adjustment process of productivity, we find that: i) a higher level of required education exerts a significantly positive influence on firm productivity, ii) additional years of over-education (both among young and older workers) are beneficial for firm productivity, and iii) additional years of undereducation (among young workers) are detrimental for firm productivity. AbstractWe provide first evidence regarding the direct impact of educational mismatch on firm productivity. To do so, we rely on representative linked employer-employee panel data for Belgium covering the period 1999-2006. Controlling for simultaneity issues, time-invariant unobserved workplace characteristics, cohort effects and dynamics in the adjustment process of productivity, we find that: i) a higher level of required education exerts a significantly positive influence on firm productivity, ii) additional years of over-education (both among young and older workers) are beneficial for firm productivity, and iii) additional years of under-education (among young workers) are detrimental for firm productivity. JEL Classification: I21; J24

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The impact of underutilization of education on productivity: A case study of the U.S. Bell companies

Cited by 159 publications

References 11 publications

Determinants of regional differences in rates of overeducation in Europe

Determinants of regional differences in rates of overeducation in Europe

Educational Mismatch and Firm Productivity: Do Skills, Technology and Uncertainty Matter?

The impact of educational mismatch on firm productivity: Evidence from linked panel data

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