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Type :article
Subject :HB Economic Theory
Main Author :Zakariya Zainizam,
Title :Wage effect of over-education and mismatch in Malaysia a random effect approach (IR)
Year of Publication :2014
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This paper explores the effect of education mismatch and earnings outcome in Malaysia by taking both over-education and mismatch by field of study into account Based on 2007 Malaysia Productivity Investment Climate Survey (etcs), it is found that around 18%o and 28%, of workers employed in jobs for which they are over and under-educated, respectively. In terms of mismatch, about 52(% of workers are employed in jobs not corresponding to their field of study (1% does not related and 35?(, no specific field of study required). Close examination reveals that nearly two third of the over educated are employed in jobs outside their own field of study. With respect to earnings outcomes, Random Effect (nz) models show that being over educated and employed outside own field of study resulted in earnings loss, between 5 and 8% for the former and 6 and l0% for the latter. Moreover, the wage penalty for being over educated increases to roughly l40% to l70% if working in jobs unrelated to their field of study. Greater earning loss may suggest that among the over educated, they are heterogeneous of both schooling and workers. As such, the results imply that there are significant costs to selecting a major and then deciding to work in an occupation unrelated to the major since knowledge and skills acquired is not completely general and cannot simply be transferred to other occupations.
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