A mismatch made in heaven: A hedonic analysis of overeducation and undereducation

Daniel P McMillen, Paul T. Seaman, Larry D. Singell

Research output: Contribution to journalArticlepeer-review

Abstract

In this paper, a hedonic pairing process is modeled in which some workers may be overeducated or undereducated as an equilibrium outcome of a dynamic labor market. Undereducated workers are those whose abilities and training permit them to move into a job with higher qualifications, whereas overeducated workers are highly qualified workers who select into lower-skill, entry-level jobs that provide the training (or signal) necessary for promotion. The empirical model shows that these pairing types cannot be directly identified in a cross section since all workers are exactly educated during a portion of their career. However, pairing types may be imputed by comparing predicted and observed qualifications of the worker and predicted and observed requirements of the firm. Using a rich cross section and a panel of British working-age males to identify the pairing types, we confirm the predicted career development patterns with regard to on-the-job training, promotion, and wages.

Original languageEnglish (US)
Pages (from-to)901-930
Number of pages30
JournalSouthern Economic Journal
Volume73
Issue number4
StatePublished - Apr 1 2007

ASJC Scopus subject areas

  • Economics and Econometrics

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