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The impact of educational mismatches on wages: The influence of measurement error and unobserved heterogeneity

Sana Sellami, Dieter Verhaest (), Walter Nonneman and Walter van Thier

Working Papers from University of Antwerp, Faculty of Business and Economics

Abstract: We investigate the differential impact of alternative combinations of horizontal and vertical educational mismatches on wages. By using panel data for Belgian graduates, we consider the role of unobserved worker heterogeneity. Random measurement error in both types of mismatches is accounted for by adopting instrumental variable techniques. We consistently find that overeducated individuals without field of study mismatch earn less than adequately educated workers with a similar educational background. However, for individuals who are working outside their field of study, such a wage penalty is not always observed once accounting for unobserved heterogeneity and random measurement error. In some cases, field of study mismatch even seems to be financially beneficial to the worker.

Keywords: Returns to education; Field of study mismatch; Overeducation; Underemployment; Earnings inequality; Ability bias (search for similar items in EconPapers)
JEL-codes: I24 J24 J31 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2015-11
New Economics Papers: this item is included in nep-edu and nep-lma
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https://repository.uantwerpen.be/docman/irua/6d4c95/129789.pdf (application/pdf)

Related works:
Journal Article: The Impact of Educational Mismatches on Wages: The Influence of Measurement Error and Unobserved Heterogeneity (2017) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:ant:wpaper:2015021

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