Literacy and numeracy of overeducated and undereducated workers: revisiting the allocation process in the labour market

Philipp Grunau

Education Economics, 2020, vol. 28, issue 4, 403-417

Abstract: According to a prominent hypothesis, the occurrence of educational mismatches is consistent with human capital theory since over- and undereducation are substitutes for heterogeneity in the abilities and skills among educational peers. Using German data1 of literacy and numeracy test scores, I find evidence that compared to their correctly matched educational peers, overeducated (undereducated) workers have lower (better) numeracy and literacy. Controlling for former periods of educational mismatch or unemployment confirms these results. However, only a small proportion of the wage penalty (wage premium) associated with overeducation (undereducation) can be attributed to the wider consideration of human capital endowment.

Date: 2020
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DOI: 10.1080/09645292.2020.1751082

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