Competencies, firms and qualification mismatch. Returns to education and their limits

Resumen

There is broad agreement in the literature on the positive effects of education in labour market outcomes. On average, more educated individuals have better employment and earnings prospects. However, there may be some limits to the usually expected positive returns to education. The aim of this thesis is specifically to explore some of these limits. From the supply side, competencies are here addressed first. The aim has been to determine the extent to which formal education enhances the cognitive skills that are valued at work. Results reveal that tertiary education does enhance competencies, and this positive effect is greater for those individuals who have been least likely to access that educational level. From the demand side, firms play a prominent role in wage determination. It is demonstrated here that the returns on observable skills, such as qualifications, are greater in larger firms; that large firms pay better, partly due to the fact that they hire workers with greater competencies; and that the value attached to education is not always positive at the firm level. Finally, the lack of adjustment between the demand and the supply side (qualification mismatch) is addressed in the last chapter. Specifically, it considers the question of whether overeducation is temporary or permanent among new entrants in the labour market. The evidence, focusing on Spanish graduates, suggests that the persistence of overeducation during working lives is very high for many workers, and may be permanent for a substantial part of them. Furthermore, episodes of overeducation do not act as stepping-stones to access more adequate jobs, but rather they impede the achievement of good job matches. Most of the analyses are undertaken on a set of developed countries, while the last chapter is restricted to the case study of Spain. In each chapter the best available data are used in order to most effectively address every research question