Is the Over-Education Wage Penalty Permanent?
Joanne Lindley () and
Steven McIntosh ()
No 2010004, Working Papers from The University of Sheffield, Department of Economics
Much has been written about the impact of over-education on wages using cross-sectional data, although there have been few studies that analyse the returns to over-education in a dynamic setting. This paper adds to the existing literature by using panel data to investigate the impact and permanence of over-education wage penalties, whilst controlling for unobserved individual heterogeneity. Our fixed effects estimates suggest that the over-education wage penalty cannot solely be explained by unobserved heterogeneity. Over-education is permanent for many workers since around 50 percent of workers over-educated in 1991 are still over-educated in 2005. However, we also show that these workers are of lower quality compared to around 25 percent who find a match within five years of being over-educated. Finally, there is a significant scarring effect for workers over-educated in 1991 since they never fully reach parity compared to those who were matched in 1991, although this is not the case for graduates who manage to find a match within 5 years.
Keywords: Over-education; Skills (search for similar items in EconPapers)
JEL-codes: J24 J31 I2 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-edu and nep-lab
Date: 2010-01, Revised 2010-01
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http://www.shef.ac.uk/economics/research/serps/articles/2010_004.html First version, 2010 (application/pdf)
Working Paper: Is the Over-Education Wage Penalty Permanent? (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:shf:wpaper:2010004
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