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Overeducation, undereducation and earnings: further evidence on the importance of ability and measurement error bias

Dieter Verhaest (UGent) and Eddy Omey (UGent)
(2012) JOURNAL OF LABOR RESEARCH. 33(1). p.76-90
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Abstract
It is generally found that overeducated (undereducated) workers earn less (more) than adequately educated workers with similar years of education. We investigate the importance of ability and measurement error bias for these outcomes by applying a fixed-effects instrumental variable approach on data for Flemish young workers. This approach results in substantially higher overeducation penalties and undereducation bonusses than a standard random effects approach. This suggests that the upward bias resulting from unobserved worker heterogeneity is more than compensated by the negative bias resulting from measurement error. Further, we also find some evidence on heterogeneous effects of mismatches across job levels and years of experience.
Keywords
Return to education, WAGES, METAANALYSIS, MISMATCH, GRADUATE, LABOR-MARKET, OVER-EDUCATION, Overqualification, Educational mismatch, Underemployment, Panel data

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Citation

Please use this url to cite or link to this publication:

Chicago
Verhaest, Dieter, and Eddy Omey. 2012. “Overeducation, Undereducation and Earnings: Further Evidence on the Importance of Ability and Measurement Error Bias.” Journal of Labor Research 33 (1): 76–90.
APA
Verhaest, D., & Omey, E. (2012). Overeducation, undereducation and earnings: further evidence on the importance of ability and measurement error bias. JOURNAL OF LABOR RESEARCH, 33(1), 76–90.
Vancouver
1.
Verhaest D, Omey E. Overeducation, undereducation and earnings: further evidence on the importance of ability and measurement error bias. JOURNAL OF LABOR RESEARCH. 2012;33(1):76–90.
MLA
Verhaest, Dieter, and Eddy Omey. “Overeducation, Undereducation and Earnings: Further Evidence on the Importance of Ability and Measurement Error Bias.” JOURNAL OF LABOR RESEARCH 33.1 (2012): 76–90. Print.
@article{2122955,
  abstract     = {It is generally found that overeducated (undereducated) workers earn less (more) than adequately educated workers with similar years of education. We investigate the importance of ability and measurement error bias for these outcomes by applying a fixed-effects instrumental variable approach on data for Flemish young workers. This approach results in substantially higher overeducation penalties and undereducation bonusses than a standard random effects approach. This suggests that the upward bias resulting from unobserved worker heterogeneity is more than compensated by the negative bias resulting from measurement error. Further, we also find some evidence on heterogeneous effects of mismatches across job levels and years of experience.},
  author       = {Verhaest, Dieter and Omey, Eddy},
  issn         = {0195-3613},
  journal      = {JOURNAL OF LABOR RESEARCH},
  language     = {eng},
  number       = {1},
  pages        = {76--90},
  title        = {Overeducation, undereducation and earnings: further evidence on the importance of ability and measurement error bias},
  url          = {http://dx.doi.org/10.1007/s12122-011-9125-6},
  volume       = {33},
  year         = {2012},
}

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