Budapest Working Papers on the Labour Market BWP - 2008/6
By making use of Duncan & Hoffman's empirical model, the economic returns to overeducation and undereducation are estimated using comparable microdata from the middle of the 2000s for 25 European countries. The estimates confirm some of the main results found in the literature. The wage premium to a year of attained education is smaller than that to required education. Returns to overeducation are positive but smaller than those to required education. Years of undereducation result in wage penalty but the absolute value of the negative returns are smaller than the extra wage due to a year of required education, and the estimated coefficients of undereducation are non-significant for many countries. The results also suggest that both the mincerian human capital model and Thurow's job competition model could be rejected.
job-education matching overeducation undereducation returns to over- and undereducation international comparison