The Over-Education of UK Immigrants and Minority Ethnic Groups: Evidence from the Labour Force Survey

The paper explores the incidence of over and under education and the effect on earnings for immigrants and natives who hold UK qualifications, drawn from the Quarterly Labour Force Survey 1993-2003. The paper also compares earnings penalties associated with over and under education across immigrant and minority ethnic groups for men and women. The results show that compared to native born Whites, Black African, Other Non-White and Indian men are more likely to be over-educated, whilst for women it is Indian and Pakistani/Bangladeshis who are more likely to be over-educated. Estimating earnings equations shows significantly large over-education penalties for South Asian immigrant and native men, as well as White immigrant men, Black women and White UK born women. However, there are large returns to occupational skills for some minority ethnic and immigrant groups, over and above the returns to qualifications. It is suggested that these groups may therefore find it easier to find a suitable job for their UK education level if higher or further education programmes were combined with occupational specific training

The Over-Education of UK Immigrants: Evidence from the Labour Force Survey

We investigate the incidence of over-education, as well as the effect on earnings, for immigrants and natives drawn from the Labour Force Survey between 1993 and 2003. This paper investigates whether immigrants are more or less likely to be over and under-educated than are natives and if there is any evidence of economic assimilation in such propensity differences. In addition we examine whether immigrants exhibit a larger or smaller earnings for over-education compared to natives. We find that native born non-whites and immigrants are more likely to be over-educated, even after conditioning on all other socio-economic factors (including ethnicity and English speaking country of origin). However, we also find evidence of assimilation in the incidence of immigrant over-education towards that of natives. Finally, we find that over-education implies a lower return to earnings for immigrants and non-white natives, compared to native born whites. The largest loss in earnings due to over-education actually applies to white education entrants, moreover we find no significant return to over-education for non-white labour market entrants, once we distinguish between these two immigrant groups

The relative income hypothesis: does it exist over time? Evidence from the BHPS

The relative income hypothesis suggests that income inequality has a detrimental affect on people´s health. This previously well accepted relationship has recently come under scrutiny. Some claim it is a statistical artefact, while others argue that aggregate level data are not sophisticated enough to adequately test for its existence. This paper adds to the debate by estimating the relationship between income inequality and health using panel data. A random effects ordered probit is used to estimate the relationship between net household income, regional income inequality and self-reported health, for 3736 individuals over 9 years, while controlling for individual socioeconomic characteristics like gender, social class and age. Significant differences in income inequality across regions and considerable changes in health are found across years, however, the panel data estimating regressions find no significant association between any of the measures of income inequality and self-reported health. Therefore, it would appear that the relative income hypothesis does not exist over time and does not exist within Britain. Keywords: Self rated health, income inequalities, random effects ordered probit, BHPS

A Panel Data Analysis of the Incidence and Impact of Over-education

This paper adds to the overeducation literature using panel data from the British Household Panel Survey. Much has been written about who is more likely to be overeducated, and the impact of being overeducated on wages, at particular points in time using cross-sectional data. Panel data allows us to control for unobserved individual heterogeneity in the determinants of incidence and impact of overeducation. The paper goes on to estimate the determinants of transitions out of overeducation, providing new information about its duration, and the factors that influence being in, and escaping from, this state

Immigrant Labour Market Assimilation and Arrival Effects: Evidence from the Labour Force Survey

We estimate models of earnings and employment outcomes for a sample of white and non-white male immigrants drawn from the Labour Force Survey between 1993 and 2002. Two hypotheses are investigated: (i) whether immigrant outcomes assimilate towards those of natives and (ii) whether labour market conditions at time of entry to the UK labour market have a permanent impact on outcomes. We find positive earnings assimilation for all immigrant groups and strong employment assimilation for those immigrants who complete their education in the UK. We find negative employment assimilation for South Asian immigrants who completed their education overseas. There is some evidence of unemployment rates at time of entry to the labour market causing permanently lower earnings for non-white immigrants

Labour market job matching for UK minority ethnic groups

Estimates of over education from different ethnic groups are presented using a new method of calculating over education and data from the UK Labour Force Survey. Calibrated against existing mean methods, the new approach leads to lower levels of over education for men and women. While the overall extent of over education has similarities with earlier studies, the differences between ethnic groups are far less than those found in some studies and fall even further when we control for other productivity related differences. Gender differences can be partially explained by differences in working part-time, whereas some ethnic differences are exacerbated slightly by being temporarily over educated, as well as by differences in the subject of degree

Is the Over-Education Wage Penalty Permanent?

Much has been written about the impact of over-education on wages using cross-sectional data, although there have been few studies that analyse the returns to over-education in a dynamic setting. This paper adds to the existing literature by using panel data to investigate the impact and permanence of over-education wage penalties, whilst controlling for unobserved individual heterogeneity. Our fixed effects estimates suggest that the over-education wage penalty cannot solely be explained by unobserved heterogeneity. Over-education is permanent for many workers since around 50 percent of workers over-educated in 1991 are still over-educated in 2005. However, we also show that these workers are of lower quality compared to around 25 percent who find a match within five years of being over-educated. Finally, there is a significant scarring effect for workers over-educated in 1991 since they never fully reach parity compared to those who were matched in 1991, although this is not the case for graduates who manage to find a match within 5 years

Intra-industry trade and labour market adjustment: A reassessment using data on individual workers

We re-examine the relationship between intra-industry trade and labour reallocation, using individual-level data on manufacturing worker moves in the United Kingdom. The contribution of this analysis is twofold. First, we estimate the impact of intra-industry trade on worker moves between occupations as well as between industries. Second, we run individual-level regressions that allow us to control for worker heterogeneity. Our results suggest that intra-industry trade does have the stipulated attenuating effect on worker moves, both between occupations and between industries, but that this effect is relatively small compared to other determinants of labour reallocation

Vertical occupational mobility and its measurement

This paper describes a number of alternative approaches to devising a vertical occupational scale and compares the outcomes of different scales on calculations of occupational mobility. The paper describes the conceptual issues relevant to calculating occupational mobility and documents the measurement error embedded in the choice of measure, as applied to different data sets. The ranking schemes used include SOC (9) major codes ranked by mean occupational hourly earnings, Hope-Goldthorpe collapsed 36-point scores, a 15-category SOC ranking based on educational qualifications, and a 77 category ranking based on 2-digit SOC90 occupations, wage rates, educational qualifications, training and job tenure. These ranking schemes are applied to data from the 1958 NCDS cohort between the ages of 23 to 33 and 33 to 42, and to 1.25 year transitions in the Quarterly Labour Force Survey panel data. The calculations carried out show that variations in the extent of vertical occupational mobility, both upward and downward, had systematic elements. The extent of mobility was found to vary by the composition of the individuals´ data particularly in terms of lifecourse stages and gender, the number of categories in the ranking scheme, attrition in the data and flows out of employment over the mobility period, and changes in labour market conditions over time. However, the sizes of these effects were very variable

Using Financial Incentives and Improving Information to Increase Labour Market Success: A Non-Parametric Evaluation of the 'Want2Work' Programme

The `Want2Work´ programme was designed to help individuals back into work. This article uses propensity score matching to evaluate the success of a policy that cannot otherwise be evaluated using standard parametric techniques. Using a range of estimation methods, sub-samples and types of job, the scheme was successful. Our most conservative estimates indicate that participants were 4-7 percentage points more likely to find employment than a control group of non-treated job-seekers. Effects were even stronger for Incapacity Benefit recipients. Moreover, there is little evidence that participants were placed in low quality or temporary jobs