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Are educational mismatches responsible for the ‘inequality increasing effect’ of education?

By Santiago Budria

Abstract

This paper asks whether educational mismatches can account for the positive association between education and wage inequality found in the data. We use two different data sources, the European Community Household Panel and the Portuguese Labour Force Survey, and consider several types of mismatch, including overqualification, underqualification and skills mismatch. We test our hypothesis using two different measurement methods, the ‘statistical’ and the ‘subjective’ approach. The results are robust to the different choices and unambiguously show that the positive effect of education on wage inequality is not due to the prevalence of educational mismatches in the labour market.

Topics: D31 - Personal Income, Wealth, and Their Distributions, J31 - Wage Level and Structure; Wage Differentials
Year: 2010
DOI identifier: 10.1007/s11205-010-9675-7
OAI identifier: oai:mpra.ub.uni-muenchen.de:23420

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