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The B.E. Journal of Economic Analysis & Policy

Editor-in-Chief: Ludwig, Sandra / Schmitz, Hendrik

Ed. by Auriol, Emmanuelle / Barigozzi, Francesca / Brunner, Johann / Fleck, Robert / Mastrobuoni, Giovanni / Mendola, Mariapia / Requate, Till / de Vries, Frans / Wenzel, Tobias / Zulehner, Christine

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Volume 17, Issue 1


Volume 19 (2019)

Volume 6 (2006)

Volume 4 (2004)

Volume 2 (2002)

Volume 1 (2001)

The Impact of Educational Mismatches on Wages: The Influence of Measurement Error and Unobserved Heterogeneity

Sana Sellami / Dieter Verhaest
  • Corresponding author
  • Faculty of Economics and Business, ECON research group and Leuven Economics of Education Research (LEER), KU Leuven, campus Brussels, Brussels, Belgium
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/ Walter Nonneman / Walter Van Trier
Published Online: 2017-02-14 | DOI: https://doi.org/10.1515/bejeap-2016-0055


We investigate the differential impact of alternative combinations of horizontal and vertical educational mismatches on wages. By using panel data for Belgian graduates, we consider the role of unobserved worker heterogeneity. Random measurement error in both types of mismatches is accounted for by adopting instrumental variable techniques. We consistently find that overeducated individuals without field of study mismatch earn less than adequately educated workers with a similar educational background. However, for individuals who are working outside their field of study, such a wage penalty is not always observed once accounting for unobserved heterogeneity and random measurement error. In some cases, field of study mismatch even seems to be financially beneficial to the worker. These findings contribute to our understanding regarding the extent to which educational mismatches are truly problematic. The results call for policies that focus primarily on combatting vertical mismatches.

Keywords: returns to education; field of study mismatch; overeducation; underemployment; earnings inequality; ability bias

JEL Classification: I24; J24; J31


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About the article

Published Online: 2017-02-14

Flemish Government, (Grant/Award Number: ‘SSL Policy Research Centre grant’).

Citation Information: The B.E. Journal of Economic Analysis & Policy, Volume 17, Issue 1, 20160055, ISSN (Online) 1935-1682, ISSN (Print) 2194-6108, DOI: https://doi.org/10.1515/bejeap-2016-0055.

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