Overeducation wage penalty among Ph.D. holders: an unconditional quantile regression analysis on Italian data

Abstract

PurposeThe wage effect of job–education vertical mismatch (i.e. overeducation) has only recently been investigated in the case of Ph.D. holders. The existing contributions rely on ordinary least squares (OLS) estimates that allow measuring the average effect of being mismatched at the mean of the conditional wage distribution.Design/methodology/approachThe authors implement a recentered influence function (RIF) to estimate the overeducation gap along the entire hourly wage distribution and compare Ph.D. holders who are overeducated with those who are not on a specific sample of Ph.D. holders in different fields of study and European Research Council (ERC) categories. Moreover, the authors compare the overeducation gap between graduates working in the academic and non-academic sector.FindingsThe results reveal that overeducation hits the wages of those Ph.D. holders who are employed in the academic sector and in non-research and development (R&D) jobs outside of the academic sector, while no penalty exists among those who carry out R&D activities outside the academia. The size of the penalty is higher among those who are in the mid-top of the wage distribution and hold a Social Science and Humanities specialization.Practical implicationsTwo policies could reduce the probability of overeducation: (a) a reallocation of Ph.D. grants from low to high demand fields of study and (b) the diffusion of industrial over academic Ph.Ds.Originality/valueThis paper observes the heterogeneity of the overeducation penalty along the wage distribution and according to Ph.D. holders' study field and sector of employment (academic/non-academic).

The Over-Education Wage Penalty Among Phd Holders: A European Perspective

“…In line with previous studies (e.g. Di Paolo and Mané (2014) and Gaeta et al (2017Gaeta et al ( , 2022), our results indeed suggest that arguments put forward by human capital theory (Becker, 1962) only partially explain the wage gap between over-educated and well-matched PhDs.…”

“…This range for our results is in line with the few existing studies on the US, Spain and Italy (see e.g. Bender and Heywood, 2009;Canal Dominguez and Gutierrez;Di Paolo and Mané;Gaeta et al, 2022). Moreover, consistent with these studies, we find that characteristics explain less than half of the unadjusted wage penalty associated with over-education among Ph.D. holders.…”

“…In other words, the phenomenon of over-education among doctoral graduates, i.e. the situation where a doctorate holder has a higher level of education than that required for her/his job, has become widespread Heywood, 2009, 2011;Boman et al, 2017;Ermini et al, 2017;Gaeta et al, 2022).…”

“…Yet, evidence on the specific wage penalty faced by over-educated PhDs is surprisingly scarce. In other words, little is known on the wage differential between over-educated PhD graduates and their well-matched counterparts Heywood, 2009, 2011;Canal Domínguez and Rodríguez Gutiérrez, 2013;Caroleo and Pastore, 2018;Gaeta et al, 2017Gaeta et al, , 2022. This article aims to fill this gap.…”

“…The intuition is that over-educated PhD holders might have chosen (or at least accepted) to be over-educated in order to improve other aspects of their job, such as employment security, commuting time or work-life balance. Put differently, as Gaeta et al (2022) point out, the interaction with job satisfaction provides information on whether or not holding a job that does not require the acquired level of education represents a 'voluntary' status. 1 We expect the wage penalty of over-education to be the greatest among over-educated PhD holders who are over-skilled and/or dissatisfied with their jobs.…”