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Job Mismatches and Career Mobility

Le Wen () and Sholeh A. Maani ()
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Le Wen: University of Auckland
Sholeh A. Maani: University of Auckland

No 11844, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Does over-education assist or hinder occupational advancement? Career mobility theory hypothesizes that over-education leads to a higher level of occupational advancement and wage growth over time, with mixed international empirical evidence. This paper re-tests career mobility theory directly using a rich Australian longitudinal data set. A dynamic random effects probit model is employed to examine upward occupational mobility, considering two-digit occupational rank advancement and wage growth over three-year intervals. The 'Household, Income and Labour Dynamics in Australia' data across nine years are employed, and a Mundlak correction model is adopted to adjust for unobserved heterogeneity effects and potential endogeneity, both of which are important to over-education analysis. Contrary to career theory, the results point to job mismatch as an economic concern rather than a passing phase, regardless of whether or not workers are skill-matched. Results further show the importance of adjusting for endogeneity.

Keywords: labour market; over-education; over-skilling; career mobility; occupational mobility; wage growth (search for similar items in EconPapers)
JEL-codes: J24 J31 J60 (search for similar items in EconPapers)
Date: 2018-09
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Forthcoming in: Applied Economics

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