Overeducation in Developing Economies: How Can We Test for it, and What Does it Mean?

Abstract

In the absence of data measuring the number of years of schooling required to perform particular jobs, we propose a new approach to testing for increases in overeducation. Such increases are confirmed by rising education levels in menial jobs that offer very low returns to education. Overeducation is deemed a systemic problem if these jobs absorb a growing share of the educated labor force. Normatively, overeducation should sometimes be seen as a shortage of skilled jobs, not as a surplus of educated workers. We find substantial evidence of overeducation in the Philippines, mild evidence of it in India, and none in Thailand. We validate our approach by applying it alongside traditional approaches involving "objective" measures of required education to Mexican census data. [JEL: I21, J24, J33]

Job search as a determinant of graduate over-education: evidence from Australia

“…Kler, 2005;Mavromaras, McGuinness, O'Leary, Sloane and Wei, 2010) 1 , in line with international trends (e.g. Duncan & Hoffman, 1981;Hartog, 2000;Metha, Felipe, Quising & Camingue, 2011). Over-education is a costly phenomenon, as is associated with reduced individual earnings (e.g.…”

Informality and Overeducation in the Labor Market of a Developing Country

“…The fact that educational attainment remains low in developing countries means that the overeducation is a somewhat contradictory phenomenon for these economies. Nevertheless, previous studies find evidence of overeducation in developing countries (Quinn and Rubb 2006 for Mexico; Abbas 2008 for Pakistan and Mehta et al 2011 for unskilled jobs in the Philippines) and report that the incidence of overeducation is similar to that present in developed economies.…”

“…Quinn and Rubb (2006) study the phenomenon for Mexico, Abbas (2008) for Pakistan and Mehta et al (2011) for India, Mexico, the Philippines and Thailand. One reason for this paucity of studies might be data limitations that hinder identification of the education levels required for specific jobs.…”

Workplace Characteristics and Determinants of Over-education and Overskilling in the Manufacturing Sector in Malaysia

“…What is more, both over-education and overskilling studies are very limited in the context of developing country. The main reason why mismatch is not examined in developing countries stems from poor data, especially with regards to education or skills required to perform in a job (Mehta et al 2010). We are fortunate in that we have here a dataset that allows us to examine the effects of workplace characteristics on the determinants of over-education and overskilling as our dataset contains extensive information on employersemployees background.…”