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The impact of Over-education and Under-education on Earnings: Egypt in a Post Revolutionary Era

Bedir, Nada LU (2014) EKHM52 20141
Department of Economic History
Abstract
Previous research has mainly addressed the impact of over/under-education
on wages in developed countries. Therefore, this paper attempts to fill the void gap in the literature by empirically examining the impact of over-education and under-education on wages in a developing country, namely Egypt, using the 2012 Egyptian Labor Market Panel Survey (ELMPS). In order to do so, actual years of educations are divided into
years of required-education, over-education, and under-education using the realized matches
approach. Two modified specifications of the semi-logarithmic Mincer equation are used to
estimate the returns: the ORU specification proposed by Duncan and Hoffman (1981) and the dummy variables specification proposed by Verdugo &... (More)
Previous research has mainly addressed the impact of over/under-education
on wages in developed countries. Therefore, this paper attempts to fill the void gap in the literature by empirically examining the impact of over-education and under-education on wages in a developing country, namely Egypt, using the 2012 Egyptian Labor Market Panel Survey (ELMPS). In order to do so, actual years of educations are divided into
years of required-education, over-education, and under-education using the realized matches
approach. Two modified specifications of the semi-logarithmic Mincer equation are used to
estimate the returns: the ORU specification proposed by Duncan and Hoffman (1981) and the dummy variables specification proposed by Verdugo & Verdugo (1989). We contribute to the literature by employing an instrumental variable approach in order to account for the endogeneity of the three components of education. Our results indicate that using the conventional OLS method leads to an under-estimation of the returns to over-education
because of ability bias. It is found that returns to over-education are positive and in fact they are higher than returns to adequate education, which contradicts previous literature findings. It is also found that there is a trade-off between over-education and years of experience. (Less)
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author
Bedir, Nada LU
supervisor
organization
course
EKHM52 20141
year
type
H2 - Master's Degree (Two Years)
subject
keywords
education-occupation mismatch, over-education, under-education, instrumental variables, Father’s education, Egypt
language
English
id
4466868
date added to LUP
2014-06-16 11:23:02
date last changed
2014-06-16 11:23:02
@misc{4466868,
  abstract     = {{Previous research has mainly addressed the impact of over/under-education
on wages in developed countries. Therefore, this paper attempts to fill the void gap in the literature by empirically examining the impact of over-education and under-education on wages in a developing country, namely Egypt, using the 2012 Egyptian Labor Market Panel Survey (ELMPS). In order to do so, actual years of educations are divided into
years of required-education, over-education, and under-education using the realized matches
approach. Two modified specifications of the semi-logarithmic Mincer equation are used to
estimate the returns: the ORU specification proposed by Duncan and Hoffman (1981) and the dummy variables specification proposed by Verdugo & Verdugo (1989). We contribute to the literature by employing an instrumental variable approach in order to account for the endogeneity of the three components of education. Our results indicate that using the conventional OLS method leads to an under-estimation of the returns to over-education
because of ability bias. It is found that returns to over-education are positive and in fact they are higher than returns to adequate education, which contradicts previous literature findings. It is also found that there is a trade-off between over-education and years of experience.}},
  author       = {{Bedir, Nada}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{The impact of Over-education and Under-education on Earnings: Egypt in a Post Revolutionary Era}},
  year         = {{2014}},
}