Overeducation, Wages and Promotions within the Firm

23 Pages Posted: 11 Oct 2003

See all articles by Sandra Groeneveld

Sandra Groeneveld

Erasmus University Rotterdam (EUR)

Joop Hartog

University of Amsterdam - Faculty of Economics and Business (FEB); Tinbergen Institute; CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

Date Written: October 2003

Abstract

We analyse data from personnel records of a large firm producing energy and telecommunication and test for the effect of deviations between required and attained education of workers. Required education is measured as hiring standards set by the firm. We find the usual effects of over- and undereducation in a wage regression, thus rejecting the argument that such effects are exclusively due to firm fixed effects. Distinguishing, within the firm, between a sheltered internal labour market and an exposed external labour market, we find that at the internal labour market over- and undereducation significantly affect career development, in particular at younger ages, but that such effects are mostly absent at the firm's external labour market.

Keywords: education, wages, overeducation, career mobility, promotions

JEL Classification: J31, J41, M51

Suggested Citation

Groeneveld, Sandra and Hartog, Joop, Overeducation, Wages and Promotions within the Firm (October 2003). IZA Discussion Paper No. 883. Available at SSRN: https://ssrn.com/abstract=455820

Sandra Groeneveld (Contact Author)

Erasmus University Rotterdam (EUR) ( email )

Burgemeester Oudlaan 50
3000 DR Rotterdam, Zuid-Holland 3062PA
Netherlands

Joop Hartog

University of Amsterdam - Faculty of Economics and Business (FEB) ( email )

Roetersstraat 11
Amsterdam, 1018 WB
Netherlands

Tinbergen Institute

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

IZA Institute of Labor Economics

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

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