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Objective overeducation and worker well-being: a shadow price approach

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  • D. VERHAEST
  • E. OMEY

Abstract

This paper examines, for a sample of Flemish school leavers, the relation between objective over-education and job satisfaction by applying a shadow price approach. We differentiate between direct effects of overeducation and indirect effects via other job characteristics that are associated with overeducation. Additional fixed-effects estimates are executed to account for individual heterogeneity. The utility consequences of overeducation are found to be large and cannot be compensated by a reasonable wage increase at the start of the first employment. These outcomes suggest that, at labour market entry, overeducation is largely involuntary, and is likely to induce negative productivity costs. The negative consequences of overeducation are also found to dimi-nish with years of work experience.

Suggested Citation

  • D. Verhaest & E. Omey, 2008. "Objective overeducation and worker well-being: a shadow price approach," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 08/514, Ghent University, Faculty of Economics and Business Administration.
    • Handle: RePEc:rug:rugwps:08/514
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    More about this item

    Keywords

    overeducation; mismatch; underemployment; job satisfaction; well-being; shadow price;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy

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