Causal Effects of Educational Mismatch in the Labor Market

Jan Kleibrink ()

No 421, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: This paper analyzes the effect of educational mismatch on wages in Germany, using data from the German Socio-Economic Panel. Educational mismatch has been discussed extensively, mostly by applying OLS wage regressions which are prone to an unobserved heterogeneity bias. This problem is approached by using FE and IV models. As a stability check, the regressions are rerun using data from the International Adult Literacy Survey, allowing for an explicit control of skills as proxy of abilities. Results show that unobserved heterogeneity does not explain the wage differences between actual years of education and years of required education. This rejects the hypothesis that mismatched workers compensate for heterogeneity in innate abilities. The results suggest a structural problem in the German educational system as skill demand and supply are not in long-term equilibrium.

Keywords: wages; educational mismatch (search for similar items in EconPapers)
JEL-codes: I14 I21 J31 (search for similar items in EconPapers)
Date: 2013
References: Add references at CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Causal Effects of Educational Mismatch in the Labor Market (2013)
Working Paper: Causal Effects of Educational Mismatch in the Labor Market (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:421

DOI: 10.4419/86788477

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