THE INCOME PENALTY OF VERTICAL AND HORIZONTAL EDUCATION-JOB MISMATCHES IN THE KOREAN YOUTH LABOR MARKET: A QUANTILE REGRESSION APPROACH

Abstract

In this paper we estimate the income effects of over-education and horizontal education-job mismatch jointly by quantile regressions using a data set of Korean college graduates. We find that over-education and horizontal mismatch are positively correlated. Thus, the income loss by over-education (horizontal mismatch) is overestimated if it is estimated ignoring horizontal mismatch (over-education). This overestimation problem is particularly prevalent for workers at low and near-median deciles of the conditional income distribution. We also find that the income penalty on over-education is prevalent for most all quantiles, whereas the income penalty on horizontal mismatch is significant for lower quantiles.