The Effect of Job–Education Vertical Mismatch on Wages Among Recent PhD Graduates: Evidence From an Instrumental Variable Analysis

Giuseppe Lucio Gaeta (), Giuseppe Lubrano Lavadera () and Francesco Pastore
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Giuseppe Lucio Gaeta: Università di Napoli “L’Orientale” and C.MET05
Giuseppe Lubrano Lavadera: Università di Studi di Salerno

Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, 2022, vol. 8, issue 1, No 8, 197-225

Abstract: Abstract Existing studies suggest that recent PhD graduates with a job vertically mismatched with their education tend to earn lower wages than their matched counterparts. However, by being based on cross-sectional ordinary least squares (OLS) estimates, these studies raise endogeneity concerns and can only be considered evidence of a correlation between vertical mismatch and wages. This paper improves this literature by applying a heteroskedasticity-based instrumental variable estimation approach to analyzing Italian PhD holders’ cross-sectional micro-data. Our analysis suggests that previous empirical studies have provided slightly upward estimates of the impact of vertical mismatch on wages. Nevertheless, our results show that the effect of overeducation on wages is sizeable. However, no wage effect is found for overskilling. The heterogeneity of these findings by field of study and gender are also inspected.

Keywords: Job-education mismatch; Overeducation; Overskilling; Wage penalty; PhD graduates; Heteroskedasticity-based internally generated instruments; C26; I23; I26; J13; J24; J2 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s40797-021-00167-y

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