Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/78238
Authors: 
Kleibrink, Jan
Year of Publication: 
2013
Series/Report no.: 
SOEPpapers on Multidisciplinary Panel Data Research 571
Abstract: 
This paper analyzes the effect of educational mismatch on wages in Germany, using data from the German Socio-Economic Panel. Educational mismatch has been discussed extensively, mostly by applying OLS wage regressions which are prone to an unobserved heterogeneity bias. This problem is approached by using FE and IV models. As a stability check, the regressions are rerun using data from the International Adult Literacy Survey, allowing for an explicit control of skills as proxy of abilities. Results show that unobserved heterogeneity does not explain the wage diff erences between actual years of education and years of required education. This rejects the hypothesis that mismatched workers compensate for heterogeneity in innate abilities. The results suggest a structural problem in the German educational system as skill demand and supply are not in long-term equilibrium.
Subjects: 
wages
educational mismatch
JEL: 
I14
I21
J31
Document Type: 
Working Paper

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