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The Persistence of Overskilling and Its Effects on Wages. Research Report

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Title: The Persistence of Overskilling and Its Effects on Wages. Research Report
Language: English
Authors: Mavromaras, Kostas, Mahuteau, Stephane, Sloane, Peter, Wei, Zhang, National Centre for Vocational Education Research
Source: National Centre for Vocational Education Research (NCVER). 2012.
Availability: National Centre for Vocational Education Research Ltd. P.O. Box 8288, Stational Arcade, Adelaide, SA 5000, Australia. Tel: +61-8-230-8400; Fax: +61-8-212-3436; e-mail: ncver@ncver.edu.au; Web site: http://www.ncver.edu.au
Peer Reviewed: N
Page Count: 56
Publication Date: 2012
Sponsoring Agency: Australian Department of Education, Employment and Workplace Relations
Document Type: Reports - Evaluative
Education Level: Adult Education
Elementary Secondary Education
Higher Education
Descriptors: Wages, Job Satisfaction, Persistence, Salary Wage Differentials, Probability, Academic Achievement, Research Reports, Skill Analysis, Job Skills, Skilled Workers, Underemployment, Labor Utilization, Statistical Analysis, Educational Attainment, Longitudinal Studies, Economic Impact, Regression (Statistics), Education Work Relationship, Foreign Countries
Geographic Terms: Australia
ISBN: 978-1-921955-95-2
Abstract: Overskilling is the phenomenon whereby a worker's skills are underutilised in his or her job. Overskilled workers are employed, but they are underutilised and mismatched, in that their skills and abilities are not a good match with the requirements of the job. Overskilling can lead to decreased wages and job satisfaction, which suggests that the investment in skills for that individual has been somewhat wasted. Overskilling mismatch has been shown to be persistent; that is, present overskilling mismatch increases the probability of future overskilling mismatch. However, the previous research showing this extends back only one year. This report examines the persistence of mismatch over a longer (up to three years) time period and its effect on wages. An obvious explanation for the persistence of overskilling is that it reflects personal unobserved characteristics (such as the person having an inflated view of their own skills). This paper exploits longitudinal data to show that persistence is more than this, with the probability of being overskilled increasing if the individual has been overskilled in the previous period, after allowing for unobserved characteristics. Key findings include: (1) Overskilling is persistent: overskilling mismatch is common among those who have been overskilled in the past. Persistence varies by educational level, with its being lowest among university graduates and highest among VET diploma graduates and those who did not finish high school; and (2) The wages of university graduates are reduced by past overskilling, more so than for any other education level. A possible reason for the second finding is that graduates tend to be in better-paid jobs and therefore there is more at stake for them. This observation is supported by the results of quantile regressions, which differentiate the impact of overskilling by whether an individual is at the top or the bottom of the earnings distribution. With the exception of certificate III and IV graduates, workers who are better paid among their peers are more likely to suffer higher wage penalties from being overskilled. Appended are: (1) Definition of variables; and (2) Estimation of individuals' probability of being overskilled in their current job and the effect of state dependence. (Contains 15 tables, 6 figures, 1 box and 10 footnotes.)
Abstractor: ERIC
Number of References: 17
Entry Date: 2012
Accession Number: ED530336
Database: ERIC
FullText Text:
  Availability: 0
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  Data: The Persistence of Overskilling and Its Effects on Wages. Research Report
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  Data: <searchLink fieldCode="AR" term="%22Mavromaras%2C+Kostas%22">Mavromaras, Kostas</searchLink><br /><searchLink fieldCode="AR" term="%22Mahuteau%2C+Stephane%22">Mahuteau, Stephane</searchLink><br /><searchLink fieldCode="AR" term="%22Sloane%2C+Peter%22">Sloane, Peter</searchLink><br /><searchLink fieldCode="AR" term="%22Wei%2C+Zhang%22">Wei, Zhang</searchLink><br /><searchLink fieldCode="AR" term="%22National+Centre+for+Vocational+Education+Research%22">National Centre for Vocational Education Research</searchLink>
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  Data: National Centre for Vocational Education Research Ltd. P.O. Box 8288, Stational Arcade, Adelaide, SA 5000, Australia. Tel: +61-8-230-8400; Fax: +61-8-212-3436; e-mail: ncver@ncver.edu.au; Web site: http://www.ncver.edu.au
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  Data: Overskilling is the phenomenon whereby a worker's skills are underutilised in his or her job. Overskilled workers are employed, but they are underutilised and mismatched, in that their skills and abilities are not a good match with the requirements of the job. Overskilling can lead to decreased wages and job satisfaction, which suggests that the investment in skills for that individual has been somewhat wasted. Overskilling mismatch has been shown to be persistent; that is, present overskilling mismatch increases the probability of future overskilling mismatch. However, the previous research showing this extends back only one year. This report examines the persistence of mismatch over a longer (up to three years) time period and its effect on wages. An obvious explanation for the persistence of overskilling is that it reflects personal unobserved characteristics (such as the person having an inflated view of their own skills). This paper exploits longitudinal data to show that persistence is more than this, with the probability of being overskilled increasing if the individual has been overskilled in the previous period, after allowing for unobserved characteristics. Key findings include: (1) Overskilling is persistent: overskilling mismatch is common among those who have been overskilled in the past. Persistence varies by educational level, with its being lowest among university graduates and highest among VET diploma graduates and those who did not finish high school; and (2) The wages of university graduates are reduced by past overskilling, more so than for any other education level. A possible reason for the second finding is that graduates tend to be in better-paid jobs and therefore there is more at stake for them. This observation is supported by the results of quantile regressions, which differentiate the impact of overskilling by whether an individual is at the top or the bottom of the earnings distribution. With the exception of certificate III and IV graduates, workers who are better paid among their peers are more likely to suffer higher wage penalties from being overskilled. Appended are: (1) Definition of variables; and (2) Estimation of individuals' probability of being overskilled in their current job and the effect of state dependence. (Contains 15 tables, 6 figures, 1 box and 10 footnotes.)
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RecordInfo BibRecord:
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    Languages:
      – Text: English
    PhysicalDescription:
      Pagination:
        PageCount: 56
    Subjects:
      – SubjectFull: Wages
        Type: general
      – SubjectFull: Job Satisfaction
        Type: general
      – SubjectFull: Persistence
        Type: general
      – SubjectFull: Salary Wage Differentials
        Type: general
      – SubjectFull: Probability
        Type: general
      – SubjectFull: Academic Achievement
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      – SubjectFull: Research Reports
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      – SubjectFull: Skill Analysis
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      – SubjectFull: Job Skills
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      – SubjectFull: Skilled Workers
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      – SubjectFull: Underemployment
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      – SubjectFull: Labor Utilization
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      – SubjectFull: Regression (Statistics)
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      – SubjectFull: Education Work Relationship
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      – SubjectFull: Foreign Countries
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      – SubjectFull: Australia
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