Using panel estimation on longitudinal data from the Panel Survey of Employment for the Disabled (PSED), this study examines the relationship between wages and job mismatch among disabled people in Korea. This paper uses a more detailed definition of job mismatch than utilized in earlier literature. This definition recognizes three forms of over-qualifications: over-educated only, over-skilled only, and a combination of both over-educated and over-skilled. Because earlier studies have only analyzed both over-education and over-skilling together for workers with disabilities they were thus subject to potential omitted variable problems. This analysis finds that there is a strong negative association between wages and all three kinds of over-qualification. In particular, workers with disabilities face a severe wage penalty when they are both over-educated and over-skilled. However, a causal relationship between wages and over-qualification is not evident after accounting for potential endogeneity problems and/or unobserved individual characteristics. This suggests that unobserved systematic differences play a substantial role in the determination of over-qualification effects on the wages of the disabled.
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Over-education is a concept based on the discrepancy between the highest level of education held by a worker and the education level required by his/her job tasks. A worker is defined as being over-educated in this setting if his/her education level is above the requirements of their job. Similarly, over-skilling typically refers to a worker whom possesses more skills than those required to carry out his/her job duties adequately.
The purpose of this Act is to strive for the promotion of employment and employment security of people with disabilities in Korea. The Ministry of Employment and Labor mandates that firms hire a certain percentage of people with disabilities: workers with disabilities should account for at least 2% of the staff for companies with more than 50 workers and 3% for central and local government. If firms don’t adhere to this quota then they have to pay a penalty. However, many firms still choose to pay the penalty rather than observe the quota.
A recent survey conducted by the Korea Institute for Health and Social Affair (KIHASA) under the supervision of the Ministry of Health and Welfare indicates that the employment-population ratio for those with a disability stood at 36.9% in 2017, much lower than the 61.3% ratio for people without a disability. The unemployment rate for people with disabilities was 5.1%, about 1.5 times higher than that of the general population (3.8%).
ORU is an abbreviation for Over-education (O), Required education (R), and Under-education (U).
For dummy variables, [e^(the coefficients of variables)-1] × 100 yields the percent change in wages.
The specification with a single dummy for over-qualification is a special case of the Verdugo and Verdugo model which includes both dummies for over-education and under-education.
For reasons of brevity, the estimated coefficients for the other control variables are broadly consistent with the previous literature and are only reported in Table 3.
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Park, K. Qualifications, job mismatch, and workers with disabilities. Port Econ J (2020). https://doi.org/10.1007/s10258-019-00170-3
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