Signalling and Productivity Effects of Overeducation: Is It Really a Waste of Resources?

Abbi Kedir (), Andri Kyrizi and Martínez Mora, Francisco,
Authors registered in the RePEc Author Service: Francisco Martínez-Mora

Working Papers from Universitat Rovira i Virgili, Department of Economics

Abstract: Overeducation raises concerns that governments may be overinvesting in education. To inform the debate, this paper studies the impact of overeducation on productivity. We advance the literature by considering that returns to overeducation may be due both to productivity and signalling effects. To disentangle both effects, we apply Wolpin’s (1977) methodology and compare the rates of return of screened (employed) and unscreened (selfemployed) workers. To overcome well-known endogeneity problems due to unobserved heterogeneity, we estimate a panel with individual and employment-status fixed effects. Our results show that signalling effects are relevant and that overeducation does not carry a productivity penalty. Keywords: Overeducation, signalling model, human capital model, unobserved heterogeneity. JEL classification: I20, J24, J31.

Keywords: Educació -- Aspectes econòmics; Mercat de treball; Salaris; Efectes de l'educació sobre els; 37 - Educació. Ensenyament. Formació. Temps lliure (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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http://hdl.handle.net/2072/203170

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Working Paper: Signalling and Productivity Effects of Overeducation: Is It Really a Waste of Resources? (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:urv:wpaper:2072/203170

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