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The incidence and wage effects of overeducation using the vertical and horizontal mismatch in skills

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  • Marco Pecoraro

Abstract

Purpose - – The purpose of this paper is to propose an improved concept of educational mismatch that combines a statistical measure of over- and undereducation with the worker’s self-assessment of skill utilization. The novelty of this measurement approach consists in identifying the vertical and horizontal nature of skills mismatch, that is, a mismatch in which skills are either over/underutilized or not utilized. Design/methodology/approach - – Cross-sectional data from the Swiss Household Panel survey for the years 1999 and 2004 are used to determine the true extent of educational mismatch among workers. Moroever, different versions of the Duncan and Hoffman wage equation are estimated depending on whether basic or alternative measures of educational mismatch are included. Findings - – The empirical analyses provide the following results: first, at least two-third of the statistically defined overeducated workers perceive their skills as adequate for the job they hold and are then apparently overeducated; second, overeducated workers whose skills are not related to the job do not receive any payoff to years of surplus education; and third, apparently overeducated workers have similar wage returns compared to others with the same schooling level but who are statistically matched. All in all, these findings confirm that most of those overeducated according to the statistical measure have unobserved skills that allow them to work in a job for which they are well-matched. Originality/value - – The paper indicates the need to consider both vertical and horizontal skill mismatches when measuring educational mismatch in the labour market. In that way, it is possible to account for worker heterogeneity in skills whose omission may generate biased estimates of the incidence and wage effects of over- and undereducation.

Suggested Citation

  • Marco Pecoraro, 2016. "The incidence and wage effects of overeducation using the vertical and horizontal mismatch in skills," International Journal of Manpower, Emerald Group Publishing Limited, vol. 37(3), pages 536-555, June.
    • Handle: RePEc:eme:ijmpps:v:37:y:2016:i:3:p:536-555
    DOI: 10.1108/IJM-10-2014-0207
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    Citations

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    Cited by:

    1. L. Cultrera & B. Mahy & F. Rycx & G. Vermeylen, 2022. "Educational and skills mismatches: unravelling their effects on wages across Europe," Education Economics, Taylor & Francis Journals, vol. 30(6), pages 561-573, November.
    2. Chung‐Khain WYE & Rahmah ISMAIL, 2019. "The effects of ability on returns to over‐ and under‐education: Evidence from Malaysia," International Labour Review, International Labour Organization, vol. 158(3), pages 535-559, September.
    3. Wiedner, Jonas & Schaeffer, Merlin, 2020. "Career trajectories into undereducation. Which skills and resources substitute formal education in the intergenerational transmission of advantage?," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 68, pages 1-1.
    4. Sandra Nieto & Raul Ramos, 2017. "Overeducation, Skills and Wage Penalty: Evidence for Spain Using PIAAC Data," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 134(1), pages 219-236, October.
    5. Giuseppe Lucio Gaeta & Giuseppe Lubrano Lavadera & Francesco Pastore, 2016. "Much ado about nothing? The wage penalty of holding a Ph.D. degree but not a Ph.D. job position," Discussion Papers 7_2016, CRISEI, University of Naples "Parthenope", Italy.
    6. Michela Vecchi & Catherine Robinson & Maja Savic & Marina Romiti, 2023. "Vertical and Horizontal Mismatch in the UK: Are Graduates' Skills a Good Fit for Their Jobs?," National Institute of Economic and Social Research (NIESR) Discussion Papers 548, National Institute of Economic and Social Research.
    7. Philipp Grunau & Marco Pecoraro, 2017. "Educational mismatch and promotions to managerial positions: a test of the career mobility theory," Applied Economics, Taylor & Francis Journals, vol. 49(12), pages 1226-1240, March.
    8. Sheruni De Alwis & Nick Parr & Fei Guo, 2020. "The Education–Occupation (Mis)Match of Asia-Born Immigrants in Australia," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 39(3), pages 519-548, June.
    9. Juerg Schweri & Annina Eymann & Manuel Aepli, 2020. "Horizontal mismatch and vocational education," Applied Economics, Taylor & Francis Journals, vol. 52(32), pages 3464-3478, June.
    10. Carolina Castagnetti & Luisa Rosti & Marina Toepfer, 2017. "Overeducation and the Gender Pay Gap in Italy. A Double Selectivity Approach," DEM Working Papers Series 144, University of Pavia, Department of Economics and Management.
    11. Yvonne Riaño, 2021. "Highly Skilled Migrant and Non-Migrant Women and Men: How Do Differences in Quality of Employment Arise?," Administrative Sciences, MDPI, vol. 11(1), pages 1-19, January.
    12. Mariia Vasiakina & Silvana Robone, 2018. "Education-job mismatch as a determinant of health: evidence from the Russian Federation," RIEDS - Rivista Italiana di Economia, Demografia e Statistica - The Italian Journal of Economic, Demographic and Statistical Studies, SIEDS Societa' Italiana di Economia Demografia e Statistica, vol. 72(4), pages 101-111, October-D.

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