A Mismatch Made in Heaven: A Hedonic Analysis of Overeducation and Undereducation

Daniel McMillen, Paul T. Seaman () and Larry D. Singell ()
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Paul T. Seaman: Department of Economic Studies, University of Dundee
Larry D. Singell: Department of Economics, University of Oregon

Southern Economic Journal, 2007, vol. 73, issue 4, pages 901–930

Abstract: In this paper, a hedonic pairing process is modeled in which some workers may be overeducated or undereducated as an equilibrium outcome of a dynamic labor market. Undereducated workers are those whose abilities and training permit them to move into a job with higher qualifications, whereas overeducated workers are highly qualified workers who select into lower-skill, entry-level jobs that provide the training (or signal) necessary for promotion. The empirical model shows that these pairing types cannot be directly identified in a cross section since all workers are exactly educated during a portion of their career. However, pairing types may be imputed by comparing predicted and observed qualifications of the worker and predicted and observed requirements of the firm. Using a rich cross section and a panel of British working-age males to identify the pairing types, we confirm the predicted career development patterns with regard to on-the-job training, promotion, and wages.

JEL-codes: J24 J31 (search for similar items in EconPapers)

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Working Paper: A Mismatch Made in Heaven: A Hedonic Analysis of Overeducation and Undereducation (2003)
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