Overskilling Dynamics and Education Pathways

20 Pages Posted: 4 Aug 2009

See all articles by Kostas G. Mavromaras

Kostas G. Mavromaras

University of Melbourne - Melbourne Institute: Applied Economic & Social Research; IZA Institute of Labor Economics

Seamus McGuinness

Economic and Social Research Institute, Ireland

Yin King Fok

University of Melbourne; University of Melbourne - Melbourne Institute: Applied Economic & Social Research

Abstract

This paper uses panel data and econometric methods to estimate the incidence and the dynamic properties of overskilling among employed individuals. The paper begins by asking whether there is extensive overskilling in the labour market, and whether overskilling differs by education pathway. The answer to both questions is yes. The paper continues by asking whether overskilling is a self-perpetuating labour market state (state dependence), and whether state dependence differs by education pathway. The paper uses a dynamic random effects probit which includes Mundlak corrections and it models the initial conditions following Heckman's method. It finds that there is extensive overskilling state dependence in the workplace, and to the degree that overskilling can be interpreted as skills underutilisation and worker-job mismatch, this is an important finding. Overskilled workers with a higher degree show the highest state dependence, while workers with vocational education show none. Workers with no post-school qualifications are somewhere between these two groups. The finding that higher degree graduates suffer the greatest overskilling state dependence, combined with the well-established finding that they also suffer the highest overskilling wage penalty, offers an alternative and useful perspective to compare the attributes of vocational and degree qualifications.

Keywords: overskilling, education pathways, state dependence, dynamic estimation

JEL Classification: J24, J31

Suggested Citation

Mavromaras, Kostas G. and McGuinness, Seamus and Fok, Yin King, Overskilling Dynamics and Education Pathways. IZA Discussion Paper No. 4321, Available at SSRN: https://ssrn.com/abstract=1442616 or http://dx.doi.org/10.2139/ssrn.1442616

Kostas G. Mavromaras (Contact Author)

University of Melbourne - Melbourne Institute: Applied Economic & Social Research ( email )

Level 5, FBE Building, 111 Barry Street
Parkville, Victoria 3010
Australia

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Seamus McGuinness

Economic and Social Research Institute, Ireland ( email )

Dublin 4
Ireland

HOME PAGE: http://www.esri.ie/about_us/staff/view_all_staff/view/index.xml?id=1040

Yin King Fok

University of Melbourne ( email )

185 Pelham Street
Carlton, Victoria 3053
Australia

University of Melbourne - Melbourne Institute: Applied Economic & Social Research ( email )

Level 5, FBE Building, 111 Barry Street
Parkville, Victoria 3010
Australia

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