Overeducation or overskilling: Do working environments matter?

Abstract

Overeducation concern in recent years has been stimulated by evidence challenging the productive value of education. A group of empirical studies suggest that returns to education can be limited, namely by (the required) job characteristics. This paper analyses how working environments affect the relationship between overeducation and worker’s earnings in Spain. To do so, the Spanish sample of the PIAAC data has been used, relying on wage type-equations (ORU specification) at the individual level, estimated using PIAACREG and Heckman two steps econometrics techniques. Results achieved suggest that job limits to marginal productivity (and in turn, wages) of those overeducated can be smaller when the working environments entail dealing with uncertain economic contexts and engage more in innovation activities. Higher education policy should rethink education oriented towards challenging and changing jobs (working environments).

Keywords: Overeducation, working environment, innovation, PIAAC, Spain.