Overeducation and Employment Mismatch: Wage Penalties for College Degrees in Business

Abstract

Overeducation and underemployment are of increasing national concern. Recent research estimates that 48% of workers are overeducated for their positions. The wage penalty for overeducation varies significantly across majors by gender. Using the American Community Survey (Ruggles et al., 2010), the authors examine the extent of overeducation among business-related majors. This article contributes to the literature with detailed results of the wage penalties by gender for each of the 13 business-related majors, controlling for occupational and industry classifications. Overall, this authors find the penalty for overeducation among most business-related majors to vary from 4% to 14%. Overeducated women in business-related majors, however, appear to suffer lower wage penalties compared to other majors.

Keywords:

• business majors
• human capital
• overeducation
• returns to college education