Educational Mismatch and Promotions to Managerial Positions: A Test of the Career Mobility Theory

Posted: 30 Jan 2018

See all articles by Philipp Grunau

Philipp Grunau

Government of the Federal Republic of Germany - Institute for Employment Research (IAB)

Marco Pecoraro

University of Neuchatel

Date Written: January 22, 2018

Abstract

Career mobility theory suggests that given a certain occupation, schooling improves upward mobility in terms of promotion and wage growth. We are the first to test the implications of this theory for over- and under-education by means of direct information about promotions to managerial positions. Using German administrative data entailing an employer-reported – and hence objective – measure of educational requirements, we show that over-educated workers are indeed more likely to be promoted and that this career mobility advantage is more pronounced in the early stages of their working lives. By contrast, under-educated workers are less likely to be promoted to managerial positions. Moreover, in terms of wage growth, while over-educated workers benefit more, under-educated workers benefit less from promotions than their well-matched educational peers. Altogether, these findings strongly support the career mobility theory. Furthermore, by differentiating between internal and external promotions, we provide evidence that promotions are more likely for over-educated workers within the establishment, whereas the opposite applies for under-educated workers. This finding indicates the relevance of both over- and under-education as signals of true ability to other employers.

Keywords: Overeducation, undereducation, career mobility, promotion, wage growth, signalling

JEL Classification: J24, J31, J41, M12, M51

Suggested Citation

Grunau, Philipp and Pecoraro, Marco, Educational Mismatch and Promotions to Managerial Positions: A Test of the Career Mobility Theory (January 22, 2018). Applied Economics, Vol. 49, No. 12, 2017, Available at SSRN: https://ssrn.com/abstract=3106764

Philipp Grunau

Government of the Federal Republic of Germany - Institute for Employment Research (IAB) ( email )

Regensburger Str. 104
Nuremberg, 90478
Germany

Marco Pecoraro (Contact Author)

University of Neuchatel ( email )

Rue Abram-Louis-Breguet 2
Neuchatel, CH-2000
Switzerland

HOME PAGE: http://www2.unine.ch/sfm/page-14462.html

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