IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp4982.html
   My bibliography  Save this paper

Formal Education, Mismatch and Wages after Transition: Assessing the Impact of Unobserved Heterogeneity Using Matching Estimators

Author

Listed:
  • Lamo, Ana

    (European Central Bank)

  • Messina, Julián

    (Universidad de Alicante)

Abstract

This paper studies the incidence and consequences of the mismatch between formal education and the educational requirements of jobs in Estonia during the years 1997-2003. We find large wage penalties associated with the phenomenon of educational mismatch. Moreover, the incidence and wage penalty of mismatches increase with age. This suggests that structural educational mismatches can occur after fast transition periods. Our results are robust for various methodologies, and more importantly regarding departures from the exogeneity assumptions inherent in the matching estimators used in our analysis.

Suggested Citation

  • Lamo, Ana & Messina, Julián, 2010. "Formal Education, Mismatch and Wages after Transition: Assessing the Impact of Unobserved Heterogeneity Using Matching Estimators," IZA Discussion Papers 4982, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp4982
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp4982.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Joseph G. Altonji & Todd E. Elder & Christopher R. Taber, 2005. "Selection on Observed and Unobserved Variables: Assessing the Effectiveness of Catholic Schools," Journal of Political Economy, University of Chicago Press, vol. 113(1), pages 151-184, February.
    2. Francesco Caselli & Silvana Tenreyro, 2006. "Is Poland the Next Spain?," NBER Chapters, in: NBER International Seminar on Macroeconomics 2004, pages 459-533, National Bureau of Economic Research, Inc.
    3. James Albrecht & Susan Vroman, 2002. "A Matching Model with Endogenous Skill Requirements," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(1), pages 283-305, February.
    4. Alfonso Alba-Ramírez, 1993. "Mismatch in the Spanish Labor Market: Overeducation?," Journal of Human Resources, University of Wisconsin Press, vol. 28(2), pages 259-278.
    5. Séamus McGuinness, 2006. "Overeducation in the Labour Market," Journal of Economic Surveys, Wiley Blackwell, vol. 20(3), pages 387-418, July.
    6. van der Velden, R.K.W. & van Smoorenburg, M.S.M., 1997. "The measurement of overeducation and undereducation: self-report vs. job-analyst method," ROA Research Memorandum 2E, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    7. Barro, Robert J & Lee, Jong-Wha, 2001. "International Data on Educational Attainment: Updates and Implications," Oxford Economic Papers, Oxford University Press, vol. 53(3), pages 541-563, July.
    8. Sicherman, Nachum & Galor, Oded, 1990. "A Theory of Career Mobility," Journal of Political Economy, University of Chicago Press, vol. 98(1), pages 169-192, February.
    9. Hartog, Joop, 1980. "Earnings and Capability Requirements," The Review of Economics and Statistics, MIT Press, vol. 62(2), pages 230-240, May.
    10. Ana Lamo & Julian Messina & Etienne Wasmer, 2006. "Are Specific Skills an Obstacle to Labor Market Adjustment? Theory and an Application to the EU Enlargement," Working Papers hal-03459097, HAL.
    11. Velden R.K.W. Van der & Smoorenburg M.S.M. van, 1997. "The Measurement of Overeducation and Undereducation: Self-Report vs. Job Analyst Method," ROA Research Memorandum 002, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    12. McGuinness, Seamus & Sloane, Peter J., 2011. "Labour market mismatch among UK graduates: An analysis using REFLEX data," Economics of Education Review, Elsevier, vol. 30(1), pages 130-145, February.
    13. Seamus McGuinness, 2007. "How biased are the estimated wage impacts of overeducation? A propensity score matching approach," Applied Economics Letters, Taylor & Francis Journals, vol. 15(2), pages 145-149.
    14. Andrea Ichino & Fabrizia Mealli & Tommaso Nannicini, 2008. "From temporary help jobs to permanent employment: what can we learn from matching estimators and their sensitivity?," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 23(3), pages 305-327.
    15. Jovanovic, Boyan, 1979. "Job Matching and the Theory of Turnover," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 972-990, October.
    16. Sicherman, Nachum, 1991. ""Overeducation" in the Labor Market," Journal of Labor Economics, University of Chicago Press, vol. 9(2), pages 101-122, April.
    17. Juan J. Dolado & Marcel Jansen & Juan F. Jimeno, 2009. "On‐the‐Job Search in a Matching Model with Heterogeneous Jobs and Workers," Economic Journal, Royal Economic Society, vol. 119(534), pages 200-228, January.
    18. Dolton, Peter & Silles, Mary, 2001. "Over education in the graduate labour market: some evidence from alumni data," LSE Research Online Documents on Economics 19546, London School of Economics and Political Science, LSE Library.
    19. S. Mcguinness, 2003. "Graduate overeducation as a sheepskin effect: evidence from Northern Ireland," Applied Economics, Taylor & Francis Journals, vol. 35(5), pages 597-608.
    20. Duncan, Greg J. & Hoffman, Saul D., 1981. "The incidence and wage effects of overeducation," Economics of Education Review, Elsevier, vol. 1(1), pages 75-86, February.
    21. Groeneveld, Sandra & Hartog, Joop, 2004. "Overeducation, wages and promotions within the firm," Labour Economics, Elsevier, vol. 11(6), pages 701-714, December.
    22. Haltiwanger, John C. & Vodopivec, Milan, 2002. "Gross worker and job flows in a transition economy: an analysis of Estonia," Labour Economics, Elsevier, vol. 9(5), pages 601-630, November.
    23. Kostas Mavromaras & Seamus Mcguinness & Yin King Fok, 2009. "Assessing the Incidence and Wage Effects of Overskilling in the Australian Labour Market," The Economic Record, The Economic Society of Australia, vol. 85(268), pages 60-72, March.
    24. Alberto Abadie & Guido W. Imbens, 2006. "Large Sample Properties of Matching Estimators for Average Treatment Effects," Econometrica, Econometric Society, vol. 74(1), pages 235-267, January.
    25. Hartog, Joop, 2000. "Over-education and earnings: where are we, where should we go?," Economics of Education Review, Elsevier, vol. 19(2), pages 131-147, April.
    26. Ana I Moro-Egido & Santiago Budría, "undated". "Overeducation and Wages in Europe: Evidence from Quantile Regression," Studies on the Spanish Economy 229, FEDEA.
    27. Bauer, Thomas K., 2002. "Educational mismatch and wages: a panel analysis," Economics of Education Review, Elsevier, vol. 21(3), pages 221-229, June.
    28. Richard R. Verdugo & Naomi Turner Verdugo, 1989. "The Impact of Surplus Schooling on Earnings: Some Additional Findings," Journal of Human Resources, University of Wisconsin Press, vol. 24(4), pages 629-643.
    29. P. J. Sloane & H. Battu & P. T. Seaman, 1999. "Overeducation, undereducation and the British labour market," Applied Economics, Taylor & Francis Journals, vol. 31(11), pages 1437-1453.
    30. McGuinness, Seamus & Bennett, Jessica, 2007. "Overeducation in the graduate labour market: A quantile regression approach," Economics of Education Review, Elsevier, vol. 26(5), pages 521-531, October.
    31. Felix Büchel & Andries de Grip & Antje Mertens (ed.), 2003. "Overeducation in Europe," Books, Edward Elgar Publishing, number 3054.
    32. Manski, Charles F, 1990. "Nonparametric Bounds on Treatment Effects," American Economic Review, American Economic Association, vol. 80(2), pages 319-323, May.
    33. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 87(3), pages 355-374.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kiersztyn, Anna, 2013. "Stuck in a mismatch? The persistence of overeducation during twenty years of the post-communist transition in Poland," Economics of Education Review, Elsevier, vol. 32(C), pages 78-91.
    2. Kampelmann, Stephan & Rycx, François, 2012. "The impact of educational mismatch on firm productivity: Evidence from linked panel data," Economics of Education Review, Elsevier, vol. 31(6), pages 918-931.
    3. Lucrezia Fanti & Dario Guarascio & Matteo Tubiana, 2019. "Skill Gap, Mismatch, and the Dynamics of Italian Companies' Productivity," LEM Papers Series 2019/30, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    4. Sattinger, Michael & Hartog, Joop, 2013. "Nash bargaining and the wage consequences of educational mismatches," Labour Economics, Elsevier, vol. 23(C), pages 50-56.
    5. Patrizia Ordine & Giuseppe Rose, 2014. "Too Many Graduates? A Theory Of (Efficient) Educational Mismatch And Evidence From A Quasi-Natural Experiment," Working Papers 201409, Università della Calabria, Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF.
    6. Jason Dean, 2018. "Does it matter if immigrants work in jobs related to their education?," IZA Journal of Migration and Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 8(1), pages 1-42, December.
    7. Halvarsson, Daniel & Tingvall, Patrik, 2017. "The Impact of Employing Mismatched Workers on Firm Productivity, Wages and Profits," Ratio Working Papers 291, The Ratio Institute.
    8. Kupets, Olga, 2016. "Education-job mismatch in Ukraine: Too many people with tertiary education or too many jobs for low-skilled?," Journal of Comparative Economics, Elsevier, vol. 44(1), pages 125-147.
    9. Olga Kupets, 2015. "Skill mismatch and overeducation in transition economies," IZA World of Labor, Institute of Labor Economics (IZA), pages 224-224, December.
    10. Bhatt, Rachana & Koedel, Cory & Lehmann, Douglas, 2013. "Is curriculum quality uniform? Evidence from Florida," Economics of Education Review, Elsevier, vol. 34(C), pages 107-121.
    11. Keith A. Bender & John S. Heywood, 2017. "Educational mismatch and retirement," Education Economics, Taylor & Francis Journals, vol. 25(4), pages 347-365, July.
    12. Patrizia Ordine & Giuseppe Rose, 2011. "Educational Mismatch and Wait Unemployment," Working Papers 19, AlmaLaurea Inter-University Consortium.
    13. Marta Palczyńska, 2021. "Overeducation and wages: the role of cognitive skills and personality traits," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 21(1), pages 85-111.
    14. Bryn Lampe & Catherine de Fontenay & Jessica Nugent & Patrick Jomini, 2022. "Climbing the Jobs Ladder Slower: Young People in a Weak Labour Market," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 55(1), pages 40-70, March.
    15. Olga Kupets, 2015. "Education in transition and job mismatch: Evidence from the skills survey in non-EU transition economies," KIER Working Papers 915, Kyoto University, Institute of Economic Research.
    16. Orbay, Benan & Aydede, Yigit, 2015. "Educational mismatch and the cost of underutilization in Turkish labour markets," MPRA Paper 65713, University Library of Munich, Germany.
    17. Didier, Nicolas, 2024. "Educational mismatch, labor market completeness, and gender: Evidence from Chile," International Journal of Educational Development, Elsevier, vol. 105(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. L. Cattani & G. Guidetti & G. Pedrini, 2014. "Assessing the incidence and wage effects of overeducation among Italian graduates using a new measure for educational requirements," Working Papers wp939, Dipartimento Scienze Economiche, Universita' di Bologna.
    2. Inmaculada Garc�a-Mainar & V�ctor M. Montuenga-G�mez, 2017. "Subjective educational mismatch and signalling in Spain," Documentos de Trabajo dt2017-03, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.
    3. Kampelmann, Stephan & Rycx, François, 2012. "The impact of educational mismatch on firm productivity: Evidence from linked panel data," Economics of Education Review, Elsevier, vol. 31(6), pages 918-931.
    4. Hanan Morsy & Adamon N. Mukasa, 2019. "Working Paper 326 - Youth Jobs, Skill and Educational Mismatches in Africa," Working Paper Series 2452, African Development Bank.
    5. Abbi Kedir & Andri Kyrizi & Francisco Martinez-Mora, 2012. "Signalling and Productivity Effects of Overeducation: Is It Really a Waste of Resources?," Discussion Papers in Economics 12/19, Division of Economics, School of Business, University of Leicester.
    6. Morsy, Hanan & Mukasa, Adamon, 2019. "Youth Jobs, Skill and Educational Mismatches in Africa," MPRA Paper 100394, University Library of Munich, Germany.
    7. David Boto-García & Marta Escalonilla, 2022. "University education, mismatched jobs: are there gender differences in the drivers of overeducation?," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 39(3), pages 861-902, October.
    8. Ghignoni, Emanuela & Verashchagina, Alina, 2014. "Educational qualifications mismatch in Europe. Is it demand or supply driven?," Journal of Comparative Economics, Elsevier, vol. 42(3), pages 670-692.
    9. Luca Cattani & Giovanni Guidetti & Giulio Pedrini, 2018. "Overeducation among Italian graduates: do different measures diverge?," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 35(2), pages 491-521, August.
    10. Iñaki Iriondo & Teodosio Pérez-Amaral, 2013. "The Effect of Educational Mismatch on Wages Using European Panel Data," Working Papers 700, Queen Mary University of London, School of Economics and Finance.
    11. Kiersztyn, Anna, 2013. "Stuck in a mismatch? The persistence of overeducation during twenty years of the post-communist transition in Poland," Economics of Education Review, Elsevier, vol. 32(C), pages 78-91.
    12. Balzhan Serikbayeva & Kanat Abdulla, 2022. "Education-Job Mismatch: Implications for Individual Earnings and Aggregate Output," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 163(2), pages 723-752, September.
    13. Baktash, Mehrzad B., 2023. "Overeducation, Performance Pay and Wages: Evidence from Germany," GLO Discussion Paper Series 1327, Global Labor Organization (GLO).
    14. Jian Z. Yeo & Sholeh A. Maani, 2017. "Educational mismatches and earnings in the New Zealand labour market," New Zealand Economic Papers, Taylor & Francis Journals, vol. 51(1), pages 28-48, January.
    15. Verhaest, D. & van der Velden, R.K.W., 2010. "Cross-country differences in graduate overeducation and its persistence," ROA Research Memorandum 007, Maastricht University, Research Centre for Education and the Labour Market (ROA).
    16. Eleni Kalfa & Matloob Piracha, 2017. "Immigrants’ educational mismatch and the penalty of over-education," Education Economics, Taylor & Francis Journals, vol. 25(5), pages 462-481, September.
    17. Léné, Alexandre, 2011. "Occupational downgrading and bumping down: The combined effects of education and experience," Labour Economics, Elsevier, vol. 18(2), pages 257-269, April.
    18. Sucharita Ghosh & Emanuele Grassi, 2020. "Overeducation and overskilling in the early careers of PhD graduates: Does international migration reduce labour market mismatch?," Papers in Regional Science, Wiley Blackwell, vol. 99(4), pages 915-944, August.
    19. Floro Ernesto Caroleo & Francesco Pastore, 2018. "Overeducation at a Glance. Determinants and Wage Effects of the Educational Mismatch Based on AlmaLaurea Data," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 137(3), pages 999-1032, June.
    20. Fanti, Lucrezia & Guarascio, Dario & Tubiana, Matteo, 2019. "Skill Gap, Mismatch, and the Dynamics of Italian Companies’ Productivity," MPRA Paper 95694, University Library of Munich, Germany.

    More about this item

    Keywords

    matching estimators; education mismatch; wage determination;
    All these keywords.

    JEL classification:

    • J0 - Labor and Demographic Economics - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp4982. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.