Vertical and Horizontal Educational Mismatches of Female Graduates in Taiwan

Abstract

This study considers both vertical and horizontal educational mismatches, with the former referring to overeducation and undereducation, and the latter to the mismatch between college major and job. It is found that the wage premium of the vertical educational match is greater than that of the horizontal educational match. A better vertical match augments the wage premium of an improvement in the horizontal match, and vice versa. The horizontal educational mismatch appears to be an extended scenario of overeducation because graduates from colleges with low rankings have a higher probability of being vertically overeducated as well as horizontally mismatched. Graduates from highly-ranked colleges are privileged to not only have high earnings but also to have low probabilities for the vertical and horizontal mismatches. These low probabilities indirectly raise their earnings. The indirect effects of academic characteristics on earnings are calculated. The approach we propose provides an insight into how academic characteristics comprehensively influence earnings.

Do Skill Mismatches Create a Wage Penalty? Alternative Estimates for Korea*

“…Thus, if individual heterogeneity in ability is controlled for appropriately, skill mismatch wage penalties should be roughly similar across these countries. However, our PSM findings are not consistent with those of Tao and Hung's (). This may be due to inappropriate controlling for ability: Tao and Hung () use college grades to proxy for ability, whereas standardized test scores are usually regarded as the appropriate proxy for ability.…”

“…However, our PSM findings are not consistent with those of Tao and Hung's (). This may be due to inappropriate controlling for ability: Tao and Hung () use college grades to proxy for ability, whereas standardized test scores are usually regarded as the appropriate proxy for ability. Thus, the proxy variable used in Tao and Hung () may not be appropriate.…”

“…Thus, the OLS results show that the wage penalty is stronger for overeducation than for skill mismatches. This finding is consistent with Tao and Hung's () result from Taiwan. AGE is used as a proxy for experience.…”

“…This result implies that the probability of being skill‐mismatched is significantly lower for workers with 4‐year college degrees than for those with 2‐year college degrees. Furthermore, regardless of gender, overeducation ( EM1 ) appears to have a significant positive effect on the probability, which is consistent with Tao and Hung (). Coefficients indicate that the probability of being skill‐mismatched is higher by 1.35 for an overeducated male and by 1.17 for an overeducated female, compared to a well‐matched worker of the same gender.…”

“…This implies that the wage penalty resulting from skill mismatches may be as large as that resulting from overeducation in Asian countries. This conjecture is partially supported by Tao and Hung (2014), who simultaneously examined the wage penalties associated with educational and skill mismatches for female graduates in Taiwan.…”