Field-of-study mismatch and overqualification: labour market correlates and their wage penalty

an article by Guillermo Montt (International Labour Office, Genève, Switzerland) IZA Journal of Labor Economics Volume 6 Article 2 (2017)

Abstract

Field-of-study mismatch occurs when a worker, trained in a particular field, works in another field. This study draws on the Survey of Adult Skills (PIAAC) to explore how skill supply and labour market demand dynamics influence mismatch. It updates cross-national estimates on mismatch and estimates the mismatch wage penalty.

Findings suggest that around 40% of workers are mismatched by field at their qualification level, 11% overqualified in their field and 13% overqualified and working outside their field. The saturation of the field in the labour market and the transferability of the fields’ skills predict the incidence of field-of-study mismatch and over-qualification.

Workers who are mismatched by field only suffer a wage penalty if they are overqualified.

JEL Classification: J24, J31

Full text (PDF)

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Real Wages, Amenities and the Adjustment of Working Hours Across Regional Labour Markets

SERC Discussion Paper 130 by Teresa Schlüter (SERC and London School of Economics and Political Science) published by SERC (Social Economics Research Centre) (March 2013)

Abstract

This article establishes a link between the traditional labour economics and the urban economics literature by analysing differences in working hours across regional labour market areas in the UK.

Using a real wage index reflecting skill adjusted earnings net of quality adjusted house prices in Britain and panel data on working hours the effect of regional real wages on labour supply is assessed. The identification strategy relies on workers who move across 157 labour market areas in Britain and includes individual fixed effects.

The main finding is that working hours are significantly higher in labour market areas that offer lower real wages. Decreasing real wages by £1,000 results in an increase of working hours of 0.3 %. Real wage differentials can be seen as a proxy for the local amenity level. I can replicate my finding including a set of amenities instead of the real wage index.

The effect is mainly due to labour supply decisions of low-skilled workers who work significantly longer hours in low real wage areas than high skilled workers. This indicates that low skilled workers are willing to increase their labour supply in order to afford living in high amenity areas.

Full text (PDF 35pp)

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The Effect of Early Cognitive Ability on Earnings Over the Life-Cycle

an article by Torberg Falch (Norwegian University of Science and Technology) and Sofia Sandgren Massih (Uppsala University) published in LABOUR Volume 26 Issue 3 (September 2012)

Abstract

This paper utilizes information on cognitive ability at age 10 and earnings information from age 20 to 65 to estimate the return to ability over the life-cycle.

Cognitive ability measured at an early age is not influenced by the individual’s choices of schooling.

We find that most of the unconditional return to early cognitive ability goes through educational choice.

The conditional return is increasing for low levels of experience and non-increasing for experience above about 15–25 years.

The return is similar for men and women, and highest for individuals with academic education. Only a small part of the return can be explained by higher probability of having a supervisory position.

JEL classifications: J24, J30, J31

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How important is family background for labor-economic outcomes?

an article by Anders Björklund and Markus Jäntti (Swedish Institute for Social Research (SOFI), Stockholm University) published in Labour Economics Volume 19 Issue 4 (August 2012)

Abstract

This paper uses Swedish register data to examine four classical outcomes in empirical labor economics: IQ, noncognitive skills, years of schooling and long-run earnings.

We estimate sibling correlations – and the variance components that define the sibling correlation – in these outcomes.

We also estimate correlations for MZ-twins, who share all genes.

We also extend the variance-component decomposition by accounting for birth order. We find that conventional intergenerational approaches severely underestimate the role of family background, and that future research should follow a more multidimensional approach to the study of family background.

Highlights

► We estimate sibling correlations in five central labour-economic outcomes.
► These correlations suggest a large role for family background.
► Conventional intergenerational models underestimate the role of family background.
► Future research should find out what siblings share more than parental income.

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