Incidence and wage effects of educational mismatch in the Swiss labour market

This thesis proposes a reassessment of the incidence and wage effects of educational mismatch by focusing on the Swiss labour market. The case of Switzerland is interesting in many respects. First, it is important to understand why a significant share of the Swiss graduates are overeducated while various industries are facing a shortage of qualified personnel. In addition, no attempt has been made to establish whether overeducation is associated with a wage disadvantage in the Swiss context. Chapter 2 presents a novel measure of educational mismatch that incorporates the worker’s self-assessment of skill utilization, which allows overeducation to be specified in apparent, vertical and horizontal terms. Moreover, different versions of the log-wage equation are estimated depending on whether basic or alternative measures of educational mismatch are included. Chapter 3 is exclusively interested in estimating the returns to educational mismatch without taking the worker’s self-assessment of skill utilization into account, but a panel data set is used to control for unobserved ability. An estimation strategy is proposed to identify the differential rate of return between required education and educational mismatch, while avoiding the potential endogeneity problem that arises from job changes. Chapter 4 focuses on a specific cohort of salaried employees graduated in a higher academic education. While worker heterogeneity in perceived skills mismatch is accounted for when measuring graduate overeducation, the analysis in Chapter 4 differs from other chapters in that different definitions of perceived skills mismatch are used to check the results' sensitivity and two estimation methods are applied to control for unobserved ability.