Educational mismatch and the cost of underutilization in Turkish labour markets

Orbay, Benan and Aydede, Yigit (2015): Educational mismatch and the cost of underutilization in Turkish labour markets.

Abstract

There is no guarantee that the right candidate will be matched with the right job in labour markets. If the mismatch is substantial, the surplus education and the deficit in schooling lead to underutilization and a loss in productivity in the economy as a whole. The aim of this study is to understand the importance of these issues for Turkish Economy by analyzing the economic returns of educational mismatch in Turkey. First we explore educational mismatch levels in Turkey for nine different occupation areas in different regions and for different industries using four recent household surveys from 2009 to 2012, which include more than one million observations. Based on this data, we analyze effects of educational mismatch on wages in Turkish labor market by using the ORU models. Results indicate that wage loss of over-educated workers is substantially higher for higher age. Regional ORU estimations show that Istanbul is the region with highest benefit for additional required education. Over-education rewards and under-education penalties are also among the highest for İstanbul. Manufacturing is the industry with the highest population and with the highest wage effects for both over-education and under-education. Among the major occupations, wage effects are in general highest for office clerks. Finally, the cost of underutilization and productivity loss due to educational mismatch is substantial in Turkey.

• Item Type: MPRA Paper
• Language: English
• Keywords: Educational mismatch, economic returns, underutilization, Turkey
• Subjects: I - Health, Education, and Welfare > I2 - Education and Research Institutions > I20 - General; I - Health, Education, and Welfare > I2 - Education and Research Institutions > I26 - Returns to Education; J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J24 - Human Capital ; Skills ; Occupational Choice ; Labor Productivity

References

Alba-Amirez, A. 1993. “Mismatch in the Spanish Labor Market: Overeducation?”, Journal of Human Resources, 27 (2), 259-278.

Bauer, T., K., 2002, “Educational mismatch and wages: a panel analysis”, Economics of Education Review, 21, 221-229.

Budría, S., Moro-Egido, A. 2008. “Education, educational mismatch, and wage inequality: evidence for Spain”, Economics of Education Review, 27, 332–41.

Chevalier, A. 2000. “Graduate Over-Education in the UK”, Centre for the Economics of Education Discussion Paper, 07.

Chiswick, M. R., Miller, P. W. 2009. "Does the choice of reference levels of education matter in the ORU earnings equation?" , IZA Discussion Paper, No: 4382

Chiswick, B. R., Miller, P. W. 2008. “Why is the Payoff to Schooling Smaller for Immigrants?”, Labour Economics, Vol. 15, No. 6, 1317-1340.

Daly, M. C., Büchel, F., Duncan, G. J. 2000. “Premiums and penalties for surplus and deficit education: evidence from the United States and Germany”. Economics of Education Review, 19, 169–178.

Dolton, P., Vignoles, A. 2000. “The incidence and effects of overeducation in the UK graduate labour market”. Economics of Education Review, 19, 179–198.

Di Pietro, G., Urwin, P. 2006. “Education and skills mismatch in the Italian graduate labour market”, Applied Economics, 38, 79–93.

Duncan, G. J., Hoffman, S. D. 1981. “The incidence and wage effects of overeducation”, Economics of Education Review, 1(1), 75-86.

Eurofound. “European Working Conditions Survey”. http://www.eurofound.europa.eu/surveys/ewcs/2010/index.htm Son erişim tarihi: 25 Ağustos 2014

Filiztekin, A., 2011, “Education-occupation mismatch in Turkish labor market”, http://mpra.ub.uni-muenchen.de/35123/
MPRA Paper No. 35123, posted 1. December,19:03 UTC Galasi, P. 2008. “The effect of educational mismatch on wages for 25 countries”, Budapest Working Papers On The Labour Market, 8.

Groot, W. and Maassen van der Brink, H., (2000) Overeducation in the Labor Market: A Meta-Analysis, Economics of Educaton Review, 19, 149-158.

Groot, W.1996. “The Incidence of, and Returns to Overeducation in the UK,” Applied Economics, 28, 1345–1350.

Hartog, J. 2000. “Over-education and earnings: where are we, where should we go?,” Economics of Education Review, 19(2), 131-147.

Hartog, J., Oosterbeek, H. 1988. “Education, Allocation and Earnings in the Netherlands; Overschooling?”, Economics of Education Review, 7(2), 185–194.

Kiker, B. F., Santos, M. C., Mendes de Oliviera, M. 1997. “ Overeducation and undereducation: evidence for Portugal”, Economics of Education Review, 16,111–25.

Joanna, P.,A., Nabanita Datta Gupta, N.D., Wadensjö, E., 2014, “Overeducation among immigrants in Sweden: incidence, wage effects and state dependence”, IZA Journal of Migration, 3:9. http://www.izajom.com/content/3/1/9. Korpi, T., Tahlin, M. 2009, “Educational mismatch, wages, and wage growth: Overeducation in Sweden, 1974–2000”, Labor Economics, 16, 183-93. Larno,A., Messina, J, 2010, “Formal education, mismatch and wages after transition: Assessing the impact of unobserved heterogeneity using matching estimators” , Economics of Education Review, 29, 1086-99. McGuiness, S. 2008. “How biased are the estimated wage impacts of overeducation? A propensity score matching approach”, Applied Economics Letters, 15, 145-149

Quintini, G. 2011. “Right for the Job: Over-quilified or Under-skilled” OECD Social, Employment and Migration Working Paper No: 120.

Ren, W., Miller, P. W. 2011. “ Changes over time in the return to education in urban China: conventional and oru estimates”, China Economic Review, doi:10.1016/j.chieco.2011.08.008.

Rumberger, R. W. 1987. “High school dropouts: A review of issues and evidence,” Review of Educational Research, 57, 101-121.

Santos, M. C. 1995 “Education and Earnings Differentials in Portugal”, PhD thesis, Faculty of Economics, Porto University, Porto, Portugal.

T.C. Kalkınma Bakanlığı. “Onuncu Kalkınma Planı, 2014-2018”. http://www.kalkinma.gov.tr/Lists/Kalknma%20Planlar/Attachments/12/Onuncu%20Kalk%C4%B1nma%20Plan%C4%B1.pdf Son erişim tarihi: 25 Ağustos 2014.

Tsai, Y. 2010. “Returns to overeducation: a longitudinal analysis of the U.S. labor market”, Economics of Education Review, 29, 606–17.

Türkiye İstatistik Kurumu, 2009. “Hanehalkı İşgücü Araştırması Mikro Seti”, Yayın no: 3468 ISBN: 978-975-19-4849-6

Türkiye İstatistik Kurumu, 2010. “Hanehalkı İşgücü Araştırması Mikro Seti”, Yayın no: 3580 ISBN: 978-975-19-5089-5

Türkiye İstatistik Kurumu, 2011. “Hanehalkı İşgücü Araştırması Mikro Seti”, Yayın no: 3677 ISBN: 978-975-19-5313-1

Türkiye İstatistik Kurumu, 2012. “Hanehalkı İşgücü Araştırması Mikro Seti”, Yayın no: 3925 ISBN: 978-975-19-5645-3

Türkiye İstatistik Kurumu. “Uluslararası Standart Meslek Sınıflaması (ISCO-88)”. http://tuikapp.tuik.gov.tr/DIESS/SiniflamaSatirListeAction.do?surumId=210&seviye=1&detay=H&turId=41&turAdi= 9 Son erişim tarihi: 25 Ağustos 2014.

Türkiye İstatistik Kurumu. “Altılı Ekonomik Faaliyet Sınıflaması (NACE Rev.2)”. http://tuikapp.tuik.gov.tr/DIESS/SiniflamaSatirListeAction.do?surumId=358&seviye=1&detay=H&turId=1&turAdi= Son erişim tarihi: 25 Ağustos 2014.

Varhaest, D., Omey,E. 2006b. “The impact of overeducationand its measurement” Social Indicators Research, 77, 419-448.

Verdugo, R. R., Verdugo, N. T. 1989. “The Impact of Surplus Schooling on Earnings”, The Journal of Human Resources, 24(4), 629-643.