Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/69321
Authors: 
Hartog, Joop
Sattinger, Michael
Year of Publication: 
2012
Series/Report no.: 
Discussion Paper Series, Forschungsinstitut zur Zukunft der Arbeit 7025
Abstract: 
The paper provides a theoretical foundation for the empirical regularities observed in estimations of wage consequences of overeducation and undereducation. Workers with more education than required for their jobs are observed to suffer wage penalties relative to workers with the same education in jobs that only require their educational level. Similarly, workers with less education than required for their jobs earn wage rewards. These departures from the Mincer human capital earnings function can be explained by Nash bargaining between workers and employers. Under fairly mild assumptions, Nash bargaining predicts a wage penalty for overeducation and a wage reward for undereducation, and further predicts that the wage penalty will exceed the wage reward. This paper reviews the established empirical regularities and then provides Nash bargaining results that explain these regularities.
Subjects: 
overeducation
undereducation
Nash bargaining
qualitative mismatches
Mincer earnings function
wages
JEL: 
J31
J24
C78
C51
Document Type: 
Working Paper

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