Overeducation and wages: the role of cognitive skills and personality traits

ABSTRACT

This article investigates the extent to which personality traits and cognitive skills can be seen as potential determinants of overeducation, and can explain the overeducation wage penalty. Using a representative survey of the Polish working-age population with well-established measures of cognitive skills and personality traits, I find that accounting for personality and cognitive skills does not change the size and the statistical significance of overeducation wage penalty estimates. My results also demonstrate that personality is one of the contributors to the risk of being overeducated among workers aged 18–29, but not among workers aged 30–68. Among younger workers, agreeable individuals are more likely to be overeducated, while conscientious individuals are less likely to be overeducated. Moreover, lower numeracy skills are associated with higher probability of being overeducated.

KEYWORDS:

• Overeducation
• educational mismatch
• wages
• personality traits
• cognitive skills
• non-cognitive skills

JEL:

• D91
• I26
• J24
• J31

Acknowledgements

I would like to thank two anonymous referees for their useful comments and suggestions. I also wish to thank Jan Baran and Iga Magda for their insightful comments, and Jan Gromadzki for calculating the LFS statistics. I also want to thank the participants of the 2016 EALE conference and Warsaw International Economic Meeting 2019 for their discussion and remarks. This publication was created as part of the ‘Youth Employment PartnerSHIP’ project, financed by Iceland, Liechtenstein and Norway through the EEA and Norway Grants Fund for Youth Employment, which seeks to combat unemployment among young people. It measures the effectiveness of instruments to support young people who are not working or studying in four countries: Poland, Spain, Italy, and Hungary.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Correction Statement

This article has been republished with minor changes. These changes do not impact the academic content of the article.

Notes

1 Eurostat Labour Force Survey (LFS) data.

2 The Big Five model defines personality on five dimensions: openness to experience, conscientiousness, extraversion, agreeableness, and neuroticism (the opposite of emotional stability) (McCrae & Costa, 1999). Grit is defined as perseverance and a passion for pursuing long-term goals (Duckworth et al., 2007).

3 For a detailed discussion of the advantages and disadvantages of the different measures, see: e.g., Hartog (2000) and Leuven and Oosterbeek (2011).

4 International Standard Classification of Education 1997 (UNESCO Institute for Statistics 2012).

5 The choice not to include undereducated individuals and the undereducation dummy in the main specification is mainly driven by the aim to estimate OLS and PSM models on the same sample. I estimate the model with two dummies, for overeducation and for undereducation, as a sensitivity analysis (Table A6 in the appendix).

Additional information

Funding

This work was supported by the EEA and Norway Grants Fund for Youth Employment under grant number: 2017-1-008 and co-financed from the Polish funds granted for science in 2018–2022 for the implementation of international projects.

Notes on contributors

Marta Palczyńska

Marta Palczyńska is an economist at the Institute for Structural Research (IBS, Warsaw) and a PhD candidate at the Warsaw School of Economics. Her work focuses on the role of cognitive and non-cognitive skills in the labour market, educational mismatches, and the evaluation of the youth labour market policies. Previously, she worked at the Educational Research Institute (IBE, Warsaw), where she was involved in research projects on the situations of youth in the labour market (EXCEPT), and on the assessment of adults competences (PIAAC). She also cooperated with the OECD in the field of non-cognitive skills measurement.