Scandinavian Working Papers in Economics

Working Papers,
Lund University, Department of Economics

No 2009:1: Education-occupation mismatch: Is there an income penalty?

Martin Nordin (), Inga Persson () and Dan-Olof Rooth ()
Additional contact information
Martin Nordin: Department of Economics, Lund University, Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund, Sweden
Inga Persson: Department of Economics, Lund University, Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund, Sweden
Dan-Olof Rooth: Department of Economics, Lund University, Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund, Sweden

Abstract: This paper adds to the small literature on the consequences of education-occupation mismatches. It examines the income penalty for field of education – occupation mismatches for men and women with higher education in Sweden and reveals that the penalty for such mismatches is large for both men and women. In fact, it is substantially larger than has been found for the US. Controlling for cognitive ability further establishes that the income penalty is not caused by a sorting by ability, at least for Swedish men. The income penalty for men decreases with work experience which is an indication that education-specific skills and work experience are substitutes to some extent. There is no evidence, though, that the mismatched individuals move to a matching occupation over time. Thus, for some, the income penalty seems to be permanent.

Keywords: Human capital; rate of return; salary wage differentials; educational economics

JEL-codes: I21; J24; J31

21 pages, February 6, 2009

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