Abstract:
This thesis follows a three essay approach to examine the impact of worker ‘skill matching’ on earnings and labour mobility. The analyses are at the individual level based on micro-panel-data in the Australian labour market. The first essay explores the determinants of over-education and its impact on earnings in the Australian labour market by using both pooled and panel features of the data. Measurement error and unobserved heterogeneity are addressed. Alternative measures of over-education are evaluated. The trade-off between education and other types of human capital suggests that an excess of education may compensate for the other shortages in human capital, such as experience and the length of tenure. These relationships and the effects of over-education on earnings via qualification and occupation are examined. The second essay extends the analyses in essay one to investigate the extent of matching between education and occupation and the resulting earnings effects on immigrants in Australia. Correlated random effects (CRE) logit results suggest that both English speaking background (ESB) and Non-English speaking background (NESB) immigrants have high rates of over-education. Age at migration and the year of arrival have significant effects on the incidence of over-education among NESB immigrants, but show no effects among ESB immigrants. The effects of age at migration, the year of arrival, and the country of qualification on earnings are examined based on longitudinal analyses. The third essay addresses worker mobility resulting from skill under-utilisation in a dynamic setting. Wooldridge’s (2005) Conditional Maximum Likelihood (CML) estimator is applied to control for the initial conditions problems. Mundlak’s (1978) correction is used to solve the correlation between the explanatory variables and the error terms. These analyses are extended to examine the theory of career mobility among job mismatched workers from the perspective of both occupation moblity and wage growth, and also whether over-education is temporary or persistent.