Educational mismatch and its impact on earnings: evidence from Indian labour market

Educational mismatch and its impact on earnings: evidence from Indian labour market PurposeThe purpose of this paper is to examine the incidence and determinants of educational mismatch in the Indian labour market. It also attempts to measure the wage effects of educational mismatch, and other individual and work-related characteristics.Design/methodology/approachEducational mismatch is modelled using multiple Mincerian equations. Wage effects are measured using the novel identification strategy of Lewbel (2012), which constructs internal instruments to obviate potential endogeneity problems.FindingsThe authors find that the returns to over-education are positive and significant, while the returns to under-education are negative and significant. However, over-educated would earn less than the workers who have the same educational level, but who are engaged in occupations for which they are adequately educated.Originality/valueThis study is one of the earliest attempts to identify the determinants of educational mismatch in the Indian labour market. Additionally, it measures the effect of educational mismatch on labour market earnings, as well as marginal wage effects of each surplus (or deficit) year of education. Methodological improvements ensure that the results are robust to the sample selection bias, as well as the endogeneity bias. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Social Economics Emerald Publishing

Educational mismatch and its impact on earnings: evidence from Indian labour market

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0306-8293
DOI
10.1108/IJSE-05-2016-0134
Publisher site
See Article on Publisher Site

Abstract

PurposeThe purpose of this paper is to examine the incidence and determinants of educational mismatch in the Indian labour market. It also attempts to measure the wage effects of educational mismatch, and other individual and work-related characteristics.Design/methodology/approachEducational mismatch is modelled using multiple Mincerian equations. Wage effects are measured using the novel identification strategy of Lewbel (2012), which constructs internal instruments to obviate potential endogeneity problems.FindingsThe authors find that the returns to over-education are positive and significant, while the returns to under-education are negative and significant. However, over-educated would earn less than the workers who have the same educational level, but who are engaged in occupations for which they are adequately educated.Originality/valueThis study is one of the earliest attempts to identify the determinants of educational mismatch in the Indian labour market. Additionally, it measures the effect of educational mismatch on labour market earnings, as well as marginal wage effects of each surplus (or deficit) year of education. Methodological improvements ensure that the results are robust to the sample selection bias, as well as the endogeneity bias.

Journal

International Journal of Social EconomicsEmerald Publishing

Published: Dec 4, 2017

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