The effects of over-education among Pedagogical and Educational Science graduates. With three labour market theories: Human Capital Theory, Job Competition Model and Assignment Model

Abstract

In this study, we investigated how over-education among DPES graduates sits within the context of three labour market theories: Human Capital Theory (HCT) Job Competition Model (JCM) & Assignment Model (AM). Over-education among the DPES graduates is widely represented (38.1%) excluding the unemployed DPES graduates (6.7%). The hypotheses on wage are tested with the ORU-specification with the dummy model in a linear regression. The results on wage show that over-educated DPES graduates earn significantly less as correct educated DPES graduates. The second hypotheses are about individual differences and if over-education is caused by different individual’s capabilities. Our results show that over-educated DPES graduates earn significantly less but are not worse in any of the useful capabilities, favouring the JCM interpretation of the labour market, implying that the job characteristics for determining wage are important. Previous research (McGuinness, 2006; Battu et al., 1999; Hartog, 2000) tends to favour the Assignment interpretation of the labour market, wherein both individual and job characteristics are important. This research incorporated explicit measures of beneficial capabilities for DPES graduates, however none of the capabilities decreased the chance of being over-educated. Our results highlight the importance of a good fit between the organization and the over-educated worker.