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European Journal of Social Sciences – Volume 9, Number 2 (2009)

Educational and Qualificational Mismatches: Non-Monetary


Consequences in Pakistan

Shujaat Farooq
PhD Scholar, Pakistan Institute of Development Economics
(PIDE)Islamabad Pakistan
E-mail: shjt_farooq@yahoo.com

Asif Javid
Assistant Professor, Mirpur University of Science & Technology (AJK)
E-mail: asif@sukhi.org

Usman Ahmed
Staff Economist, Pakistan Institute of Development
Economics (PIDE)Islamabad Pakistan
E-mail: rohanahmed2001@yahoo.com
Tel: +92-51-9201240; Fax: +92-51-9110886

Muhammad Jehangir Khan


Research Economist, Pakistan Institute of Development
Economics (PIDE)Islamabad Pakistan
E-mail: mjehangirkhan@yahoo.co.uk
Tel: +92-346-80066362; Fax: +92-51-9110886

Abstract
Labor market mismatches either in qualification or in education, reflects inefficiencies in
the allocation of resources. A greater access to higher education became the mantra of
Government of Pakistan in past ten years. There is significant rise in the average level of
education, but over time concerns come up about the heterogeneity of the skills of the new
workers, as well as the capacity of the labor market to absorb the influx of extra workers.
Over-education defined as whose educational attainments exceed to the requirements of
education in a particular occupation. Over-education implies underutilization of skills and
unemployment for the least qualified. The research is based on clerical workers of
Pakistan, working in both public and private sector. In the light of education and
qualification mismatches, the findings show that individuals who underutilize their
education and skills are dissatisfied because they earn almost no return on surplus
education. Since they get no reward on surplus education, therefore they have less job
involvement and high quit intention rate as compare to the matched workers.

Keywords: Educational, Qualificational, Mismatches Pakistan,

1. Introduction
The economic role of human capital, particularly education has long been documented by economists
and policy makers (Becker 1964). According to some observers view, educational system is an

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effective vehicle for producing the skills required to maintain growth in the economy.1 The versatile
impact of education on every aspect of human existence makes it a vital area for policy framework
especially for developing countries. Developing countries where majority of world’s population resides
need to maximize productivity and capabilities of the advanced human capital.
In Pakistan, there is significant rise in the average level of education, but over time, more and
more workers incapable to use their educational background on the job. Two decades ago, it was
judgment that supply of labor meeting the demand of labor. However in the current decade, it is argued
that supply of labor may have outstripped the demand of labor in some professions and high qualified
peoples taking positions of low qualified peoples, therefore the skills of some highly educated group
may be underutilized. Overeducated workers are defined as those whose educational attainments
exceed to the requirements of education in a particular occupation. The abilities, skills, attitudes and
knowledge owned by workers, which is their qualification, may be lower or higher than those required
in their jobs. When this take place, the worker is said to be mismatched in qualification: under-
qualified or over-qualified.
In the economic literature, a worker’s level of formal education is often used as a proxy for
his/her level of qualification because the latter is more difficult to identify and measure. Indeed, a
number of papers treat qualification mismatch and education mismatch as equivalent phenomena, as in
Hersch (1991), Groot (1996), Battu, Belfield and Sloane (1999), Ng (2001), and Frenette (2004),
among others. Being the part of human capital, education is a device which promotes and develops
worker’s qualification. The literature specifically on qualification mismatches is limited. For this
reason, this paper is aimed at clarifying this issue by analyzing non-monetary consequences for
workers through both education and qualification mismatches.
A dominant paradigm in both sociology and economics suggests that surplus schooling does
not always raise productivity and therefore will not always be rewarded with higher earnings (Duncan
and Hoffman 1981, Rumberger 1987, Dolton and Vignoles (2000). There is evidence that
Overeducation is correlated with higher level of job dissatisfaction (Berg, 1970; Bisconti and Solmon,
1976) lower level of job involvement (Kalleberg and Sorensen, 1973), high job turn over rates and low
level of productivity (Berg, 1970).
There is a substantial amount of American and European empirical evidence on the topic of
over-education but unfortunately no such literature existing in Pakistan and in other developing
countries of the region. It is the intention of this study to fill this gap in the literature and investigate
whether many empirical studies in developed economies hold for Pakistan or not.
The paper employs a job specific measure of over and under-education based on the
information provided by respondent themselves. The paper examines the effects of over-
education/over-qualification on low-level clerical/subordinate workers. The main focus of this study is
the education/qualification-job mismatch. The paper investigates the relationship between over-
education/qualification and job satisfaction, job involvement, impaired co-worker relations, future
aspirations and turn over.
The structure of the paper is organized as follows. Section II provides an overview of the
theoretical background of over-education which enfolds the description of over-education and over-
qualification and measurement of over-education, Section III composed of literature review. Section IV
provides some detail about methodology and data description and incidence of education and
qualification mismatches. Section V contains the non-monetary consequences of labor market
mismatches and in the last but not least section offers some concluding remarks and policy
implications.

1
Ivar Berg, Education and Jobs: T h e Great Trainzng Robbery (New York: Praeger Publishers, 1970).
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2. Theoratical Background
2.1. Phenomeno of Over-Education
The phenomenon of over-education is generally assessed by comparing the education acquired by each
worker with that required by his/her current job, and, as a result, workers are typically classified into
overeducated, undereducated, and adequately educated. Over-education is also defined as the
underutilization of educational skills (Tsang 1984).
The abilities, skills, attitudes and knowledge owned by workers, which is their qualification,
may be lower or higher than those required in their jobs. When this take place, the worker is said to be
mismatched in qualification: under-qualified, when his/her qualification is below that required in
his/her job, and over-qualified, when that exceeds the requirement. Moreover, over-education/over-
qualification is a relative phenomenon. A person over-educated/over-qualified in one job may not be in
another job.
In the economic literature, a worker’s level of formal education is often used as a proxy for
his/her level of qualification because the qualification is more difficult to identify and measure. A
number of papers treat qualification mismatch and education mismatch as equivalent phenomena, as in
Hersch (1991,), Battu, Belfield and Sloane (1999), Ng (2001), Frentte (2004), among others.
In the seventies decade, the wave of supply of fresh graduates in U.S. initiate the first research
on over-education by Freeman (1976). According to Freeman, the overeducated workforce would trim
the return on education, resulting lower investment on higher education; therefore, over-education was
a temporary phenomenon. Freeman’s prediction has never materialized, because overtime, over-
education appears to be a lasting trait for the U.S. economy and return to education remained high as
well Similarly, in the U.K., the recent evidence depicts that between 29% and 47% of the workforce is
over-educated and returns to education remained stable between 1978 and 1996, implying that the
demand for skills kept up with the supply (Green et al. 2000). Through cohort analysis of 1980 UK
graduates, Dolton and Vignoles (1997) found that 62% of male graduates who were over-educated in
their first job remained in a sub-graduate position six years after graduation.
According to Human Capital Theory, labor market is fully efficient, and every worker is paid
the value of his marginal product. Productivity and wages are fixes in relation to perspective jobs;
therefore overeducated workers have same productivity and receive the same wage levels as those
workers who are in jobs with required level of education. But Human Capital theory fails to explain the
underutilization of skills, institutional rigidities and non competitive markets.
In contrast to human capital theory, the Job Competition Theory (Thurow 1975) is a demand
side theory, where marginal products and consequently earnings are associated with job characteristics,
and not by individual characteristics. Individuals are allocated on jobs on the bases of their personal
characteristics, including education that guides the employers to measure the cost of training them to
perform healthy on their jobs. Since this allocation is based on available supplies of both workers and
jobs, workers may possess more education and skills than their jobs necessitate. If there is an
oversupply of educated job seekers, some educated workers will look for jobs at lower level.
Theory of Career Mobility (Sicherman and Galor 1990) considers both, supply and the demand
side of the labor market. According to this theory, individuals may choose an entry level in which the
direct returns to schooling are lower than those in other feasible entry levels if the effect of schooling
on the probability of promotion is higher in this firm. Sicherman (1991) found that overeducated
workers had a higher chance to move to a higher level job. However, Sicherman’s theory (1990) leaves
some questions unrequited. Dolton and Vignoles (2000), Buchel and Mertens (2003) have shown that a
substantial proportion of the overeducated workforce fails to secure a better job over a longer period of
several years. Alba –Ramirez (1993), Groot (1996), and Sloane et al. (1999) found no evidence as
former theory asserts that for overeducated workers the quality of the match improves with a change of
employer.
The Assignment Model (Sattinger 1993) captured a more encompassing outlook. According to
this theory, worker’s salaries are determined in part by the job they are doing, particularly whether they
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are overeducated and in part by their human capital. Due to a lack of information or rigidities in the
labor market, an allocation problem exists in which workers differing in attributes are allocated jobs
with differing levels of complexity. In a dynamic economy with heterogeneity of workers and jobs,
these frequency distributions are unlikely to match, and mismatch will be a permanent feature of labor
market. Empirical results show indeed that overeducated workers earn less than workers with a job at
the attained level of education (Duncan and Hoffman 1981; Hartog 2000). Battu et al. (1999) and
Dolton and Silles (2001) found clear differences in mismatch between different educational subjects
and occupations.
Spence’s (1973) developed Signaling Model. According to this theory, there is imperfect
information in the labor market and education is used as a signal to identify the more able, motivated,
or productive workers. Workers, therefore, invest more in education to provide good signals with the
hope that this will permit them to be distinguished from other job applicants. This investment may
raise the average education level of the labor market. This surplus education will stimulate the firms to
upgrade their educational requirements leading to so called Qualification Inflation.
According to Matching Theory (Jovanovic 1979), labor market is not opaque. There are search
costs to find a perfect match. Therefore, in this situation, both employee and employer might have an
incentive to agree on a non-optimal match. However overtime the workers are expected to leave the job
in order to obtain an improved job, therefore over-education will be temporary.
Robset (1995) notes, “those who attend the lowest quality schools may be overeducated
throughout their career. Those who attend a better school may be able to work their way upward during
their career…. Thus over-education can be a temporary or permanent condition.” Groot and Maassen
van den Brink (1997) find workers with career interruptions, such as women with children, more likely
to be over-educated. Over-schooling may also result from low geographical mobility, Battu et al.
(1999) and Dolton and Silles (2001) found a positive influence of regional mobility on the quality of
the match. Frank (1978) explains the higher probability of being overeducated among women by their
low geographical mobility opportunities.

2.2. Methods for Measuring Education and Skill Requirements


Empirical work so far has relied on three main methods to measure the degree of over-education and
under-education. The first method pertains to job analysts determining the level of education required
for a job. In this ‘Objective Approach’, trained job analyst grades the jobs. In old literature, this
approach is based on the General Education Development (GED) and Specific Vocational Preparation
(SVP) scores available from the Dictionary of Occupational Titles (DOT) in U.S. in he Netherlands, a
similar method is used by Huijgen (1984). The Objective Approach avoids the bias due to self-
reporting. 2nd, it is derived independently of the job incumbent, therefore it can provide a more exact
and unbiased measure of required schooling as a single analyst discuss the educational requirement for
a given job with an employer. However, Halaby (1994) raised two important objections to this method.
The 1st concerns the fact that a fixed job level is attached to a certain job. Any deviation of job levels
within a given occupation is not taken into account. However, variation within a given occupation with
regard to educational requirements may be considerable. This particularly affects the reliability of the
measurement instrument. The second objection is that the allocation of levels is determined by job
analysts. This is often prepared on the basis of descriptions of the tasks and the nature and required
level of knowledge and skills. However, these are subject to change, which might result in a systematic
overestimation or underestimation of the level of certain occupations.
The second method refers to ‘Self Assessment method’ (Subjective Approach) where workers
are asked directly what they regard as the required level of education for the position they hold. The
subjective character of the instrument is a point of criticism, as is the fact that respondents may not
always have a good insight in the level of education required for a job (Cohn and Khan, 1995; Halaby,
1994). Furthermore, individuals may be inclined to overestimate the educational requirements or to

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simply equate these to their own level of education. In that case, the level of over-education will be
underestimated.
Another approach tried to find the mismatch by two variables; years of schooling and
occupation (Clog and Shockey 1984; Verdugo and Verdugo, 1989). The distribution of education is
calculated for each occupation; employees who depart from the mean by more than some ad hoc value
(generally one standard deviation) are classified as overeducated. However, this method is very
sensitive to changes in labor market conditions. In case of excess supply, employers will contract
personnel with a higher level of education than is in fact required. In view of the fact that the match
between education and occupational levels which is actually achieved constitutes the basis of the
calculation of the required level of education, the level of over-education is underestimated in case of
excess supply and overestimated in case of excess demand. Therefore, the method based on the
realized matches is the least adequate one for determining over-education and under-education.

3. Review of Literature
The accuracy of the match between a worker’s education and his or her job has attracted the attention
of economists over the last two decades. The main reasons for this interest is that education-job
mismatches has relevant effects on the efficiency of the public and private investment in education by
influencing wages as well as on other labor market outcomes such as job satisfaction (Hersch 1991,
Groot 1996), on-the-job training (Sicherman 1991), geographic mobility (Dekker et al. 1996) and labor
turn over (Hersch 1991). Berg (1970) documented the plight of those who could not get jobs to match
their qualifications and Freeman (1976) drew attention to the potential problem of over-investment in
education. From these early beginnings a vast literature has evolved.
Dolton and Vignoles (2000) and Green et al. (2002) disclose that an estimated 30% of UK
graduates have more education than their job requires six years after graduating. Sloane et al. (1999)
find that 40% of graduates are over-educated six years after graduating using survey carried out by the
University of Birmingham.
The literature (Battu et al, 1999, Dolton and Vignoles, 2000, Green et al, 2002, Rumberger,
1987, Sicherman, 1991, Verdugo and Verdugo, 1989) has documented the extent of over-education
and under-education that exists in a number of countries, and highlighted the wage impact of working
in a job for which one is over-under-qualified. Describing the results very broadly, about a quarter to a
third of a nation’s employees tend to work in jobs for which they are over-qualified, with a somewhat
smaller proportion working in jobs for which the required education level exceeds their actual
qualifications. For example, the prevalence of over-qualification in the early 1990s was 24% in the
Netherlands, 28% in Spain and 33% in Portugal.
Green et al (2000) found that over-education is the result of labor market rigidities, and a non-
competitive environment. Such rigidities could arise from family commitments or labor force
immobility, and part time work etc. Using the data set of Skills Survey 2001 of U.K, Francis and
Steven (2002) concentrates on two theories; Matching Theory and Assignment Theory, and suggests
that high ability escort to lower profitability of over-education. Moreover social sciences studies are
more likely to be over-qualified. Dieter and Eddy (2002) found that the probability of over-education is
lower for search intensive individuals. Furthermore, over-education differs greatly among jobs in
different occupations and industries. Groot and Maassen van den Brink (1997) find workers with
career interruptions, such as women with children, more likely to be over-educated. Over-schooling
may also result from low geographical mobility, Battu et al. (1999) and Dolton and Silles (2001) found
a positive influence of regional mobility on the quality of the match. Frank (1978) explains the higher
probability of being overeducated among women by their low geographical mobility opportunities.
Labor market mismatches reflect inefficiencies in the allocation of resources in the economy.
Rather astoundingly, the non-monetary consequences of labor market mismatches have received little
concentration from researchers. Regarding education mismatches, only Hersch (1991), and Battu, et al.

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(2000) have explored the non-monetary effects and found that overeducated workers and
undereducated women are less satisfied than the matched workers; and the second concludes that the
adequately educated workers have a premium on job satisfaction. Allen and van der Velden (2001) and
Green and McIntosh (2002) found that qualification mismatches decrease the probability of being very
satisfied, while education mismatches do not effect to job satisfaction of workers. Cabral (2005)
scrutinized the effect of over-qualification on four dimensions of satisfaction (pay, job security, type of
work and number of hours of work and concludes that the over-qualification affects negatively to the
probability of being completely satisfied in all these cases.

4. Data and Incidence of Mismatches


In 2007, we interviewed 300 male and female clerical/subordinate full time workers. Out of the total
sample, 182 questionnaires were conducted from the public sector while the remaining was carried out
from the private sector. Out of total sample, 55 females were randomly selected from the public sector
while 35 were selected from the private sector. All workers held almost similar clerical jobs but had
different educational backgrounds with age 20 to 50 years. Data for this study was collected through
face - to - face interview transcripts.
Questionnaire covers a wide range of topics including personal characteristics, family
background, academic information, employment characteristics, job satisfaction, job involvement, co-
worker relationship, quit intentions, promotions and future aspirations. Personal characteristics include
sex, age, marital status, no. of kids, region, debt commitment etc The educational characteristics
include field of study, education level, grade of degrees, mode of study, type of school and father and
mother’s education. The work characteristics include experience, relevant work experience, job tenure,
occupation, sector of employment, type of employment, nature of job, family income, size of firm, job
skills, on the job trainings, job search behavior, quit intention, gross salary, nature of employment, on
the job training, unemployment duration, geographic mobility etc.
Respondents were also asked to evaluate their satisfaction with their education and job.
Satisfaction for individual is measured on a linear scale from 0 to 5 with the job overall; where higher
ranking indicated greater satisfaction. Skill utilization is measured by offering a choice between the
following response categories: less than 25%, 25%, 50%, 75%, and more than 75%. On The Job
Training is the response to the question. “Did the company provide any on the job training? If yes then
how many weeks?” Working experience is calculated by accumulation of all previous experiences up
to interview. Additionally, the survey will have time specific information as respondents were asked to
tell their previous employment situation. Finally a series of questions were asked about workers’
general productiveness, and economic participation-month unemployed, co-workers behavior, amount
of training and contractual status. Furthermore, we also examine the competences of workers i.e.
ability, different sills (computer, mathematical, English, typewriting skills etc). Table 1 provides a
detailed 2 overview of the sample characteristics of variables used in the Analysis. To clarify the
incidence of qualification mismatches, we used workers' self assessment criteria by two questions;
"Did your education, skills and knowledge are satisfactory to perform your current job well?"
"Do you think your knowledge and your personal abilities would allow you to perform a more
qualified job?"
Respondents answering in the affirmative to both questions are classified as over-qualified,
those who answer positively to the first question and negatively to the second, are classified as
accurately qualified, and finally, those answering negatively to the first question are classified as
under-qualified, irrespective of their answer to the second question.

2
Definition of variables is given in appendix A1.
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Table 1: Mean and Standard Errors of Variables Used in the Analysis

VARIABLES MEAN STANDARD ERROR


Education and Qualification match
OQ 0.68 1.03
UQ 0.06 0.18
OE 0.61 0.95
UE 0.15 0.37
Year_Req 12.2 5.59
Year_OE 2.4 3.12
Year_UE 0.4 0.56
Personal Characteristics
Male 0.7 0.89
Married 0.32 0.47
Experience 15.57 10.64
Tenure shorter than 1 year 0.17 0.32
Tenure between 1 and 5 years 0.42 0.59
Tenure between 6 and 10 years 0.28 0.41
Tenure 10 years and above 0.13 0.2
Year_School 14.8 21.23
Science 0.19 0.34
Commerce 0.35 0.49
Social sciences 0.46 0.61
Labor Market Characteristics
Working hours per week 49.2 10.76
Hourly wage 56.9 11.39
Parmenant job 0.34 0.47
public sector job 0.61 0.82
OJT 10.35 5.92
Job Satisfaction
degree 0 0.11 0.32
degree 1 0.18 0.37
degree 2 0.29 0.46
degree 3 0.22 0.35
degree 4 0.13 0.19
degree 5 0.07 0.13

Figure 1: Identification of Qualification Mismatches

Identification of Qualification Mismatches


(i)
Yes No
Yes Over-qualified Under-qualified
(ii) No Accurately Match Under-qualified

To obtain the data on required education for the job, respondents were asked to state the
minimum level of education which was required for the position they hold. To identify workers’
situation regarding the education match, we use the ‘modal procedure’ proposed by Kiker, Santos and
De Oliveira (1997). Thus, a worker is accurately matched in education, over-educated or under-
educated when his/her own level of education is equal, higher or lower, respectively, than the modal
level.
Subsequently the number of years of over-education is determined on the basis of the level of
education attained (in years) and the respondent’s self reports about their level of education required.

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These two variables are constructed as follow. If E is the actual number of year of education and RE is
number of years of education required for a job, thus over-education (OE) is represented by;
OE = E- RE if E>RE and
OE = 0 if E≤RE
Similarly, the number of years of under-education (UE) is determined as;
UE = RE –E if RE > E and
UE = 0 if RE ≤ E
The incidence of education and qualification mismatches by gender describes in Table 2. Under
both criteria of mismatches, the results show that over-education/qualification is more prevalent than
under-education/qualification. Furthermore, high over-education/over-qualification among females
than males is the result of labor market rigidities i.e. family commitments, less geographic mobility,
discriminatory characteristics, fewer opportunities in the labor market etc.

Table 2: Percentage Distribution of Education and Qualification Mismatches

Male Female Total


Over-educated 57 63 61
Under-educated 19 11 15
Adequately Educated 24 26 24
Over-qualified 64 75 68
Under-qualified 10 3 6
Adequately Qualified 26 22 26

Figure 2 shows the distribution of over-education/over-qualification by various age groups.


Since he results shows that young workers are more over-educated/qualified as compare to old
workers, as young workers have less work experience etc. further more, young workers are more over-
educated/qualified as they gain more education than old workers. By education level, over-
education/qualification grew by high level of education as the more educated workers had fine
educational background but poor utilization of skills. They wanted to "try something different and
more according to their education/skills.

Figure 2: Percentage Distribution of Mismatches by Age

40

30 Over-educated
Over-qualified
20

10

0
20-29 30-34 35-40 40-44 44 and
Age above

Thus, even though most of the graduate workers felt that the skills and knowledge they had
acquired at school were not being used. They felt overqualified because their potential was not being
fully used and their opportunities to learn and to grow on the job were limited. In the words of a 32-
year-old computer operator: “I would like to do innovative. I know, education is very important, but I
don't think that here people are utilizing their skills, and I feel that I don't necessarily have to have a
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degree for this job. I notice that there are lots of people sitting on top that don't have professional
degrees”.
Post graduate workers expressed similar feelings: they wanted to learn and grow on the job.
They complained of a lack of training opportunities and an inability to learn about the overall operation
of company. They complained that the specific content of what they had learned in education was not
relevant to their job. There's a lot of frustration because there isn't the usage of the skills that were
developed. Their work is more boring, more routine, less creative, and less autonomous.

Table 3: Percentage Distribution of Over-education and Over-qualification by Different Categories

Age Over-educated Over-qualified


20-29 38 24
30-34 30 29
35-40 16 20
40-44 13 22
44 and above 4 6
Marital Status
Married 36 28
Unmarried 64 72
Education
Secondary Education 4 0
Higher Secondary 21 18
Graduation 32 29
Master 43 53
Family Background
Lower 53 64
Middle 22 19
Upper 25 17
Nature of Job
Permanent 47 56
Contract 53 44
Private Sector 43 35
Public Sector 57 65

Under the education criteria, unmarried (64 percent) were more overeducated as compare to
married workers (36 percent), while qualification criteria also shows the same trend with 72 percent
unmarried and 28 percent married fell in the over-qualification region, respectively. Similarly,
education and qualification mismatches vary by field of study as well. We distinguish three field of
study; science, social science, and commerce. Field of study wise data shows that workers with social
science background were less overeducated/overqualified than science and commerce. Similarly
workers belong to poor families were more overeducated/overqualified than the middle class or rich
income families. The details are given in the above table.

5. Non-Monetary Consequences of Mismatches


5.1. Satisfaction
In its general formulation, the human capital theory treats education as an investment that may produce
different types of returns. The relationship between education and earnings has become a basic tool in
studies on earnings, wages and incomes in developed as well as developing economies. But it was
found that the explanatory power of the simple human capital earnings model increased as the non-
wage variables were added to the earnings measure (Haveman & Wolfe, 1984; McMahon, 1998). The

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importance of education increased when non-monetary benefits were taken into account (Duncan,
1976).
Non-monetary job benefits can be categorized as fringe benefits, general working conditions
and consumption benefits. A way of considering both monetary and non-monetary benefits is through
the analysis of job satisfaction. Locke defines it as ‘a pleasure or positive emotional situation resulting
from the judgment of one’s job or job experiences’. Satisfaction, according to different schools of
thought, depends on the individual’s expectations, needs (physical and psychological) and values
(Locke, 1976; Landry, 2000). Self-assessment of job satisfaction designates how people value both
monetary and non-monetary proceeds to their jobs according to their own personal preferences and
expectations. Therefore, job satisfaction may be used to gain insight into the effects of workers’
education on utility from work and, ultimately, on general welfare.
The standard economic theory assumes that job satisfaction, understood as a proxy measure of
utility from working, depends positively on income and negatively on hours of work. A dominant
literature suggests that higher levels of education are unambiguously associated with higher levels of
satisfaction (Ross & Van Willingen, 1997). However, there are several investigations that support the
negative effects of perceived over-qualification on job satisfaction dimensions (Johnson & Johnson,
2000; Hartog, 2000). Other studies suggest that longer schooling negatively affects job satisfaction
(Warr, 1992; Blanchflower & Oswald, 1992; Clark & Oswald, 1996). This counter-intuitive result has
been explained through the formation of expectation under the so-called ‘comparison income’
hypothesis: subjective job satisfaction depends not only on absolute income, but also on income
relative to a reference level against which individuals compare themselves (Clark & Oswald, 1996).
Oswald (1996)) find that high educated individuals register a lower level of satisfaction, even after
controlling for income.
a) Educated individuals have generally higher expectations that are more difficult to realize.
b) The negative effect due to the comparison with similar workers and differences in wages
across individuals with a similar level of education. The higher the level of education, the
more disperse incomes are.
c) The effect of past wages. Overall satisfaction with the job diminishes with the level of
education once income tends to stabilize.
d) Overqualified workers are less satisfied with their jobs.

5.2. The Model


To analyze the non-monetary consequences of education and qualification mismatches, estimate the
following two equations.
Satisfaction = β0+ β1 Year_Edu+ β2 OQi +β3UQi +β’ Xi + εi (1)
Satisfaction = α 0+ α 1 RE i + α 2 OEi + α 3 UE i + α 4 ln Wi +α’ Xi + εi (2)
Where Satisfaction is measured by six point scales, ln W is the logarithm of hourly wages; Xi
contains control variables including sex, field of study, level of education, marital status, experience,
job tenure and type of contract etc. Equation 1 includes dummy variables; OQi and UQi, which take a
value of 1, when worker i is over-qualified or under-qualified, respectively, and a value of zero
otherwise.

5.3. Results
One of the various consequences accredited to over-education, the one which receive the most support
in this study is the association between over-education and job satisfaction. Using the broadest possible
definition of job satisfaction, approximately 58% of the total sample reported dissatisfaction with their
present employment. This included 11% who were “very dissatisfied,” 18% who were “little satisfied”
and 29% who were only “moderately satisfied” with their work. Workers with too much education are
less satisfied. None of the respondents with less than two years of college education expressed extreme
dissatisfaction.
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5.4. Individual Characteristics


Table 4 shows the relationships between job satisfaction and individual characteristics. The percentage
of those who were satisfied (reporting satisfaction of 4 and 5 on the 0-5 scale) is reported for each
characteristic. Overall about 42% reported satisfaction with their jobs. Pertaining to age, older were
more satisfied as compare to young. With respect to parent’s level of education, workers with better
educated parents were more satisfied than those whose parents had not had a high level of education.
Similarly married people more satisfied as compare to singles. Workers with more family incomes are
more satisfied than those who have less family income.

Table 4: Job Satisfaction by Individual Characteristics (% of Satisfied Individuals)

Overall 42
Gender
Male 41
Female 44
Age
20-29 39
30-34 37
35-39 43
40-44 45
45 and above 52
Marital Status
Married 53
Unmarried 35
Parents' level of education
Below metric 34
Metric 39
Intermediate 48
Graduate and above 59
Family income
below10,000 19
10000-20000 35
20000-30000 47
30000-40000 54
40000 and above 66

5.5. Job Satisfaction by Job Characteristics


Table 5 shows the relationship between job satisfaction and a number of job characteristics. The cross
tabulation results support strong evidence for the hypothesis that high pay is associated with higher
levels of job satisfaction. Workers holding a temporary contract are less satisfied than their
counterparts. Similarly workers, who have jobs in public sector, are more satisfied than workers in the
private sector. In case of tenure, workers with longer tenure have higher rate of satisfaction than
workers holding a shorter tenure in the current job.

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Table 5: Job Satisfaction by Job Characteristics (% of Satisfied Individuals)

Monthly Income
Below 10000 21
10000-15000 32
15000-20000 47
20000-30000 56
Type of contract
Permanent 54
Temporary 37
Sector of Employment
Public 44
Private 39
Tenure
Shorter than 1 year 29
Between 1 and 5 years 38
Between 6 and 10 years 37
10 years and above 42

Table 6 summarized the results of the estimation of both equations 1 & 2, where satisfaction is
regressed on education and qualification variables, as well as the remaining human capital variables,
individual characteristics and labor market characteristics. The results show that
overeducated/overqualified workers are less satisfied and undereducated/underqualified workers are
more satisfied (significant at 5%). Satisfaction is not significantly related to required education.
Workers with higher wages are more satisfied. One imperative feature is understandable that workers
with traditional subjects (social sciences) are more satisfied as compare to the workers having
professional subjects (Math, Commerce). Since in clerical jobs, workers have to do only slab
calculations, more routine work, less creative and less autonomous work, so obviously they feel
frustration in their jobs. Similarly permanent employees are more satisfied as compared to with
contract workers.

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Table 6: Estimates of the Impact of Educational and Qualificational Mismatch on Job Satisfaction

Variable Coef. Equ. 1 Std Err. Coef. Equ.2 Std Err.


Year_edu 0.61 0.612
Year_OE -0.29** 0.039
Year_UE 0.048* 0.055
Year_RE 0.081 0.374
OQ -0.14*** 0.021
UQ 0.34* 0.08
ln working hours 0.067 0.025 0.37** 0.354
ln W 0.084* 0.074
Commerce 0.041 0.13 -0.775* 0.1621
Science -0.13*** 0.0825 -0.061** 0.082
Social Science 0.093* 0.138 0.233 0.093
male 0.043 0.11 0.12
Married 0.021* 0.116 0.41* 0.298
Permanent 0.029** 0.083 0.052 0.0169
Public 0.17* 0.216 0.69* 0.561
tenure <1 -2.08** 0.295 -1.13* 0.276
tenure between 1 and 5 -1.57** 0.289 -0.36 0.287
tenure between 6 and 10 -0.79 0.312 0.13 0.194
tenure 10 and above 1.03* 0.159 2.22* 0.394
2
R 0.57
No. of Observation 300
Note: Absolute value of t-statistics. (*), (**) and (***) indicate, respectively, significant at 10%, 5%, and 1%

Feeling of entitlement, combined with a sense of greater occupational options, made the higher
educated workers more edgy. Since workers who change jobs often do so in response to higher outside
wage offers, and attained education is most important determinant of outside wage offers than the
required education in current job.
The post graduate workers were more likely to say “No” when asked, “Would you be content to
stay in your present job for the foreseeable future?” 63% of this group, compared with 38% percent of
those with four year college education, said “No.” the lesser educated felt they had fewer occupational
options. A senior supervisor said, he deserves and like the promotion, but added “I don’t know when it
will happen”; another said it’s hard to get a promotion in this company without approach”. A third
respondent asked whether he would be content to stay in her present job, said “I may have no other
choice.”

6. Conclusion
Over-education is obviously a critical problem because it represents the wasteful investment of scarce
resources. The over-education is costly for the society and for the individuals. Existing approaches to
over-education are generally characterized by a technocratic orientation: the view that over-education
represents an “imbalancig of the social machinery” (Squires 1979), a superficial dislocation of the
social system which must be managed to make the system function more smoothly. The hidden agenda
of technocratic administrators is efficiency and productivity: “over-education/underemployment
represents an inefficient usage of human resources and lost output for the society” (Glyde 1977) our
key conclusion is that:
• There is significant and genuine incidence of over-education and over-qualification in clerical
occupation.
• Overeducated workers are young as compared to old and posses more qualification as compare
to old.

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• There is little substantiation of widespread qualification inflation, i.e. employer systematically


upgrading the educational requirements of jobs in response to the increase in the supply of
more educated labor, without changing the job content.
• There has also been a substantial increase in the supply of more educated labor.
• The results confirm our hypothesis that individuals in jobs that underutilize their education and
skills are dissatisfied because they earn almost no return on surplus education. Since the excess
education that is not required and hence may be underutilized, have zero or lower impact on
earning.
• Further more there is evidence that individuals who studied certain types of traditional
humanistic subjects are more likely to be overeducated.
We did not focus on the determinants of over-education. The results here add support further
empirical evidence supporting he view that the effect of education on satisfaction. Additional research
and analysis is, of course, defensible, especially on such topics as how to measure over-education,
estimating the determinants and impact of over-education on earning, job satisfaction, turn over, and
on the job training. Research which undertakes such analysis in great detail than we have done here
may be particularly fruitful.

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Appendix
Table A1: Definition of Variables Used in the Analysis

OQ Dummy Variable, 1 if worker is overqualified, 0 otherwise


UQ Dummy Variable, 1 if worker is underqualified, 0 otherwise
Year_edu Years of schooling completed
Year_RE Years of schooling required to perform the job well
Year_OE Numbers of years of overeducation in a job
Year_UE Numbers of years of undereducation in a job
Male Dummy Variable, 1 if worker is male, 0 otherwise
Married Dummy Variable, 1 if worker is married, 0 otherwise
Working hours Weekly working hours
Experience Years of full time work experience since age 20
Tenure shorter than 1 year Dummy Variable, 1 if tenure is lower than 1 year, 0 otherwise
Tenure between 1 and 5 years Dummy Variable, 1 if tenure is between 1 and 5 year, 0 otherwise
Tenure between 6 and 10 years Dummy Variable, 1 if tenure is between 6 and 10 year, 0 otherwise
Tenure 10 years and above Dummy Variable, 1 if tenure is more than 10 year, 0 otherwise
Ln W Natural log of hourly wage
Permanent 1, if worker has permanent job, 0 otherwise
Public 1, if worker has job in public sector, 0 otherwise

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