Over-Skilling and Labor Market Impact: The Case of South Korea

• Main Authors: Park, Kihong, Shahiri, Hazrul I.
• Format: text
• Published: Animo Repository 2019
• Subjects: Skill mismatch; over-education; over-skilling; wages; gender
• Online Access: https://animorepository.dlsu.edu.ph/apssr/vol19/iss2/2; https://animorepository.dlsu.edu.ph/context/apssr/article/1218/viewcontent/RA_201_revised.pdf
• Institution: De La Salle University

Many previous studies in the literature concerning qualification-job mismatch have focused primarily on the effect of over-education on labor market outcomes such as wages, whereas the topic of over-skilling has received relatively little attention in the literature primarily due to the unavailability of data. Moreover, some previous studies in the literature have also been constrained by the absence of panel data providing controls for unmeasured heterogeneity that might otherwise bias results. In an attempt to resolve these issues, this paper places emphasis on the wage effect of being over-skilled and extends the analysis by making use of the panel element of the Youth Panel 2007 survey. The major findings confirm and support the findings of other studies as follows: For the whole sample, significant wage penalties exist when over-skilled college graduate workers are compared with their well-matched counterparts. The wage penalties associated with over- skilling are stronger for women than for men when the data is disaggregated by gender. It indicates that the problem of being over-skilled is generally more severe in the case of women. For both genders, the wage effects of being over-skilled are greatly reduced when accounting for unobserved individual-specific characteristics such as lower abilities. The results mentioned indicate that the use of appropriate panel methodology considerably reduces the size of the relevant coefficients and suggest that cross-section results should be viewed with caution, particularly in the Korean setting.