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The return to education and skills in Italy

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  • Gian Carlo Cainarca
  • Francesca Sgobbi

Abstract

Purpose - The purpose of this paper is to estimate the incidence of educational mismatch in Italy and the return to investment in education, controlling for employees’ ability. Contrary to most existing studies, the heterogeneity of individual performance is measured directly through the assessment of required and provided skills. Design/methodology/approach - Based on original data including over 3,600 face‐to‐face interviews, this paper appraises the incidence of self‐assessed educational mismatch in the Italian private sector and estimates wage models of the economic returns to educational mismatch, skill requirements and provided skills. Findings - In Italy, under‐educated employees outnumber over‐educated ones and returns to required education and over‐education are lower than in other industrialised countries. Individual heterogeneous ability, as captured by individual skills, is a significant determinant of wage, although the inclusion of direct measures of required and provided skills does not substantially affect the estimated coefficients of the return to investment in education. Practical implications - The omission of controls for the heterogeneous ability of employees biases the results of traditional ordinary least squares (OLS) estimates of wage models. However, the bias may be small enough to make simple OLS estimates on existing cross‐sectional data an acceptable compromise to provide policy makers with reasonably accurate and up‐to‐date information. Originality/value - The paper provides a direct appreciation of individual heterogeneity that other studies can capture only through sophisticated indirect econometric techniques. In addition, the paper extends the set of available cross‐country comparisons by estimating the educational mismatch and the returns to educational and skill mismatches in the overall Italian private labour market.

Suggested Citation

  • Gian Carlo Cainarca & Francesca Sgobbi, 2012. "The return to education and skills in Italy," International Journal of Manpower, Emerald Group Publishing Limited, vol. 33(2), pages 187-205, May.
  • Handle: RePEc:eme:ijmpps:v:33:y:2012:i:2:p:187-205
    DOI: 10.1108/01437721211225444
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    Citations

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    Cited by:

    1. Peter Cappelli, 2014. "Skill Gaps, Skill Shortages and Skill Mismatches: Evidence for the US," NBER Working Papers 20382, National Bureau of Economic Research, Inc.
    2. International Labour Office., 2013. "Global employment trends for youth 2013 : a generation at risk," Global Employment Trends Reports 994816973402676, International Labour Office, Economic and Labour Market Analysis Department.
    3. Paola Gritti & Riccardo Leoni, 2013. "The impact on wages of generic competencies, psychological capital, new work practices and digital technologies," Working Papers (2013-) 1301, University of Bergamo, Department of Management, Economics and Quantitative Methods.
    4. Blázquez, Maite & Herrarte, Ainhoa & Llorente-Heras, Raquel, 2018. "Competencies, occupational status, and earnings among European university graduates," Economics of Education Review, Elsevier, vol. 62(C), pages 16-34.
    5. Riccardo Leoni & Paola Gritti, 2017. "Institutional Wage Setting, Distinctive Competencies and Wage Premia," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 3(1), pages 71-111, March.
    6. Theo Sparreboom & Alexander Tarvid, 2016. "Imbalanced Job Polarization and Skills Mismatch in Europe," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 49(1), pages 15-42, July.
    7. Maria Cristiana Martini & Luigi Fabbris, 2017. "Beyond Employment Rate: A Multidimensional Indicator of Higher Education Effectiveness," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 130(1), pages 351-370, January.
    8. Meir Russ, 2017. "The Trifurcation of the Labor Markets in the Networked, Knowledge-Driven, Global Economy," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 8(2), pages 672-703, June.
    9. Sparreboom, Theo & Tarvid, Alexander, 2016. "Imbalanced job polarization and skills mismatch in Europe (Unausgewogene Jobpolarisierung und Qualifikationsmismatch in Europa)," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 49(1), pages 15-42.
    10. Chiara Burlina & Alessandro Crociata & Iacopo Odoardi, 2021. "Can culture save young Italians? The role of cultural capital on Italian NEETs behaviour," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 38(3), pages 943-969, October.
    11. Francesca Sgobbi, 2013. "The Borders of Inter-Firm Mobility for ICT Employees in Italy," International Journal of Human Capital and Information Technology Professionals (IJHCITP), IGI Global, vol. 4(1), pages 34-45, January.
    12. Sparreboom, Theo & Tarvid, Alexander, 2016. "Imbalanced job polarization and skills mismatch in Europe (Unausgewogene Jobpolarisierung und Qualifikationsmismatch in Europa)," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 49(1), pages 15-42.

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