Effect of Education–Occupation Mismatch on Wages in India

Banantika Datta () and Udaya S. Mishra ()
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Banantika Datta: Indian Institute of Management Bangalore
Udaya S. Mishra: Centre for Development Studies

The Indian Journal of Labour Economics, 2019, vol. 62, issue 3, No 4, 389-411

Abstract: Abstract This paper investigates the effect of educational levels on wages across different occupational groups. The existing literature relating to this topic concludes that returns to surplus schooling are less than that of ideal level of schooling required for a job. This observation is not in accordance with the theory of human capital. Many authors observe that workers who are over-educated for a job are paid less than their counterparts (with ideal education level) who are in a job for which they are adequately educated. However, such observations are limited to developed countries and have not been empirically validated in the case of developing countries. Thus, this is an attempt towards analysing the effect of education, especially over-education as regards its bearing on wages in the Indian labour market. This study delves deeper into unfolding the education-wage nexus within each of the seven occupational groups defined for this study. Realised Matches method is used for calculating the over and under-educated for each occupational group. It is found that there is an agreement with human capital theory among all occupational categories in India.

Keywords: Skill mismatch; Over-education; Returns to surplus schooling; Human capital theory (search for similar items in EconPapers)
JEL-codes: I26 J24 J31 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1007/s41027-019-00172-x

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