The Incidence and Wage Penalty of Overqualification: The Case of Egypt

Ali Fakih and Zeina Lizzaik ()
Additional contact information
Zeina Lizzaik: Concordia University

No 17247, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: The phenomenon of overqualification is becoming increasingly common across many countries. In this research study, the main objective is to examine factors that determine overqualification, the impact of overqualification on wages, and the earning differences between genders in the case of Egypt. We use a cross-sectional micro-level dataset taken from the Egyptian Labor Force Survey (LFS) conducted by the Economic Research Forum (ERF). We employ a probit model to capture factors determining overqualification. The empirical results reveal that different sociodemographic, economic sector, and job-related factors determine overqualification. Moreover, we apply different matching techniques, radius matching, nearest-neighbor matching, and a weighting method, inverse probability weighting (IPW) to estimate the causal impact of overqualification on wage earnings. The result shows that overqualification affects the hourly wage earnings negatively. For further investigation, we estimate our regression by gender. The coefficients are negative for both genders, with a higher magnitude among females, revealing that overqualified females face higher wage penalties than overqualified males. The paper provides policy recommendations for both the Egyptian educational system and the job market to mitigate overqualification in the country.

Keywords: overqualification; wage penalty; matching techniques; Egypt (search for similar items in EconPapers)
JEL-codes: I21 J23 J31 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2024-08
New Economics Papers: this item is included in nep-afr, nep-ara and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://docs.iza.org/dp17247.pdf (application/pdf)

Related works:
Working Paper: The Incidence and Wage Penalty of Overqualification: The Case of Egypt (2024)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp17247

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().