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Social Indicators Research

, Volume 134, Issue 1, pp 219–236 | Cite as

Overeducation, Skills and Wage Penalty: Evidence for Spain Using PIAAC Data

  • Sandra Nieto
  • Raul Ramos
Article

Abstract

The literature on educational mismatches finds that overeducated workers suffer a wage penalty compared with properly educated workers with the same level of education. Recent literature also suggests that individuals’ skill heterogeneity could explain wage differences between overeducated and properly matched workers. The hypothesis is that overeducated workers earn less due to their lower competences and skills in relative terms. However, that hypothesis has been rarely tested due to data limitations on individuals’ skills. The aim of this paper is to test the individuals’ skill heterogeneity theory in Spain using microdata from PIAAC, because it is one of the developed countries supporting the highest overeducation rates and where its adult population holds the lowest level of skills among a set of developed countries. Our hypothesis is that the wage penalty of overeducation in Spain is explained by the lower skill level of overeducated workers. The obtained evidence confirms this hypothesis but only to a certain extent as skills only explain partially the wage penalty of overeducation.

Keywords

Overeducation Individual’s skill heterogeneity Wages 

JEL Classification

J31 I21 C13 

Notes

Acknowledgments

This work was supported by the Spanish Ministry of Economy and Competitiveness under Grant ECO2013-41022-R.

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Copyright information

© Springer Science+Business Media Dordrecht 2016

Authors and Affiliations

  1. 1.AQR-IREA Research GroupUniversitat Oberta de CatalunyaBarcelonaSpain
  2. 2.AQR-IREA Research Group, Department of Econometrics, Statistics and Applied EconomicsUniversitat de BarcelonaBarcelonaSpain

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