Overeducation, skills and wage penalty: Evidence for Spain using PIAAC data

Sandra Nieto ()

No 201406, AQR Working Papers from University of Barcelona, Regional Quantitative Analysis Group

Abstract: The literature on educational mismatches finds that overeducated workers suffer a wage penalty compared with properly educated workers with the same level of education. Recent literature also suggests that individuals’ skill heterogeneity could explain wage differences between overeducated and properly matched workers. The hypothesis is that overeducated workers earn less due to their lower competences and skills in relative terms. However, that hypothesis has been rarely tested due to data limitations on individuals’ skills. The aim of this paper is to test the individuals’ skill heterogeneity theory in Spain using microdata from PIAAC, because it is one of the developed countries supporting the highest overeducation rates and where its adult population holds the lowest level of skills among a set of developed countries. Our hypothesis is that the wage penalty of overeducation in Spain is explained by the lower skill level of overeducated workers. The obtained evidence confirms this hypothesis but only to a certain extent as skills only explain partially the wage penalty of overeducation.

Keywords: overeducation; individual’s skill heterogeneity; wages JEL classification: J31; I21; C13 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2014-03, Revised 2014-03
New Economics Papers: this item is included in nep-edu
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Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Overeducation, Skills and Wage Penalty: Evidence for Spain Using PIAAC Data (2017)
Chapter: Overeducation, skills and wage penalty: Evidence for Spain using PIAAC data (2015)
Working Paper: Overeducation, skills and wage penalty: Evidence for Spain using PIAAC data (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:aqr:wpaper:201406

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