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Effect of Education–Occupation Mismatch on Wages in India

Author

Listed:
  • Banantika Datta

    (Indian Institute of Management Bangalore)

  • Udaya S. Mishra

    (Centre for Development Studies)

Abstract

This paper investigates the effect of educational levels on wages across different occupational groups. The existing literature relating to this topic concludes that returns to surplus schooling are less than that of ideal level of schooling required for a job. This observation is not in accordance with the theory of human capital. Many authors observe that workers who are over-educated for a job are paid less than their counterparts (with ideal education level) who are in a job for which they are adequately educated. However, such observations are limited to developed countries and have not been empirically validated in the case of developing countries. Thus, this is an attempt towards analysing the effect of education, especially over-education as regards its bearing on wages in the Indian labour market. This study delves deeper into unfolding the education-wage nexus within each of the seven occupational groups defined for this study. Realised Matches method is used for calculating the over and under-educated for each occupational group. It is found that there is an agreement with human capital theory among all occupational categories in India.

Suggested Citation

  • Banantika Datta & Udaya S. Mishra, 2019. "Effect of Education–Occupation Mismatch on Wages in India," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 62(3), pages 389-411, September.
    • Handle: RePEc:spr:ijlaec:v:62:y:2019:i:3:d:10.1007_s41027-019-00172-x
    DOI: 10.1007/s41027-019-00172-x
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    More about this item

    Keywords

    Skill mismatch; Over-education; Returns to surplus schooling; Human capital theory;
    All these keywords.

    JEL classification:

    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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