The mismatch of over-education and earnings in Spain: how big are differences?

Abstract

This paper attempts to examine the incidence of over-education in Spain and to analyse the role over-education plays on an individual's income distinguishing by gender. Following Freeman's perspective, we can confirm over-education is due to an oversupply of qualified labour. We study over-education applying different matching techniques based on propensity score methods with microdata drawn from the European Statistics on Income and Living Conditions (EU-SILC, 2009-2019). Our results show that the incidence of over-education has increased over time and there exist huge differences by gender. Findings also demonstrate that over-education presents a negative effect on income. In fact, the real annual average earnings from over-educated women (men) can be approximately 7,000 (5,000) euros less than the average earnings of women (men) who were not over-educated. Policy implications are discussed in the light of the empirical results of our analysis