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Causes of Overeducation in the Australian Labour Market

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  • Ingrid Linsley

Abstract

Overeducation is a form of labour underutilisation which occurs when the formal education level of a worker exceeds that which is required for the job. In Australia close to 30 per cent of workers are overeducated and are underutilising their skills. Using data from the Negotiating the Life Course survey, this study determines the causes of overeducation in Australia. Four of the key theories that have been used to explain overeducation are tested: human capital, job competition, assignment and the career mobility theories. Tests show that the job competition model best explains the existence of overeducation in the Australian labour market.

Suggested Citation

  • Ingrid Linsley, 2005. "Causes of Overeducation in the Australian Labour Market," Department of Economics - Working Papers Series 940, The University of Melbourne.
    • Handle: RePEc:mlb:wpaper:940
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    File URL: http://www.economics.unimelb.edu.au/downloads/wpapers-05/940.pdf
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    References listed on IDEAS

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    Cited by:

    1. Giuseppe Croce & Emanuela Ghignoni, 2011. "Overeducation and spatial flexibility in Italian local labour markets," Working Papers in Public Economics 145, Department of Economics and Law, Sapienza University of Roma.
    2. Massimiliano Tani & Christopher Heaton & Gavin Chan, 2013. "The Wage Premium of Foreign Education: New Evidence from Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 46(4), pages 395-404, December.
    3. Dai Binh Tran & Sasiwimon Warunsiri Paweenawat, 2023. "The returns to education and wage penalty from overeducation: New evidence from Vietnam," Bulletin of Economic Research, Wiley Blackwell, vol. 75(4), pages 1267-1290, October.
    4. Wen, Le & Maani, Sholeh A. & Dong, Zhi, 2023. "Educational Job Mismatch, Job Satisfaction, On-the-Job Training, and Employee Quit Behavior: A Dynamic Analytical Approach," IZA Discussion Papers 15869, Institute of Labor Economics (IZA).
    5. Mohammed Alzubaidi, 2020. "The impact of overeducation on job outcomes: Evidence from Saudi Arabia," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 9(4), pages 104-120, July.
    6. Seamus McGuinness & Mark Wooden, 2007. "Overskilling, Job Insecurity and Career Mobility: Evidence from Australia," Melbourne Institute Working Paper Series wp2007n09, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    7. Ingrid Linsley, 2005. "Causes of Overeducation in the Australian Labour Market," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 8(2), pages 121-143, June.
    8. 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.
    9. Carroll, David & Tani, Massimiliano, 2013. "Over-education of recent higher education graduates: New Australian panel evidence," Economics of Education Review, Elsevier, vol. 32(C), pages 207-218.
    10. 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.
    11. Kitae Sohn, 2010. "The Role of Cognitive and Noncognitive Skills in Overeducation," Journal of Labor Research, Springer, vol. 31(2), pages 124-145, June.
    12. Ferreira Sequeda, Maria & Künn, Annemarie & de Grip, Andries, 2016. "Work-related learning and skill development in Europe: Does initial skill mismatch matter?," Research Memorandum 027, Maastricht University, Graduate School of Business and Economics (GSBE).
    13. Mañé Vernet, Ferran & Miravet, Daniel, 2010. "Sobreeducación y Sobrecualificación en los Universitarios Catalanes. Una perspectiva de género," Working Papers 2072/179592, Universitat Rovira i Virgili, Department of Economics.
    14. Antonios Maragakis & Andy van den Dobbelsteen & Alexandros Maragakis, 2016. "Validating the Need to Include the Economic Returns of Graduates as a Metric of a Higher Education Institutions Level of Sustainability," International Journal of Higher Education, Sciedu Press, vol. 5(4), pages 237-237, November.
    15. Tani, Massimiliano, 2012. "Does Immigration Policy Affect the Education-Occupation Mismatch? Evidence from Australia," IZA Discussion Papers 6937, Institute of Labor Economics (IZA).
    16. Tsai, Yuping, 2010. "Returns to overeducation: A longitudinal analysis of the U.S. labor market," Economics of Education Review, Elsevier, vol. 29(4), pages 606-617, August.
    17. David Carroll & Massimiliano Tani, 2015. "Job search as a determinant of graduate over-education: evidence from Australia," Education Economics, Taylor & Francis Journals, vol. 23(5), pages 631-644, October.
    18. Christiana Charalambidou & Steven McIntosh, 2021. "Over‐education in Cyprus: Micro and macro determinants, persistence and state dependence. A dynamic panel analysis," Manchester School, University of Manchester, vol. 89(2), pages 172-189, March.
    19. Antonios Maragakis & Andy van den Dobbelsteen & Alexandros Maragakis, 2016. "Earning Capacity of Sustainable Education - A Review of Current Perceptions Regarding the Salaries, Under-employment and Over-education of Higher-Education Graduates and their Potential Application in," Journal of Sustainable Development, Canadian Center of Science and Education, vol. 9(3), pages 261-261, April.
    20. Wen, Le & Maani, Sholeh A., 2023. "Earnings Penalty of Educational Mismatch: A Comparison of Alternative Methods of Assessing Over-Education," IZA Discussion Papers 15943, Institute of Labor Economics (IZA).
    21. Antonios Maragakis & Andy van den Dobbelsteen & Alexandros Maragakis, 2016. "Stakeholders Perceptions of a Universal Sustainability Assessment in Higher Education - A Review of Empirical Evidence," International Journal of Higher Education, Sciedu Press, vol. 5(4), pages 247-247, November.

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    More about this item

    Keywords

    Overeducation; labour market; human capital theory; career mobility;
    All these keywords.

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion

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