Education-occupation Vertical Mismatch And Its Influence On Income Disparity

According to the individual survey data from Chinese labor force survey (CLDS) 2012, The main purpose of this study is to research the phenomenon of education-occupation vertical mismatch and the influence of vertical mismatch on the income gap. Firstly, the paper makes a statistical description on the education-occupation vertical mismatch of China, confirming the existence of education-occupation vertical mismatch, which is divide into over-education and under-education. Secondly, this paper used the multiple Logit regression models from the microscopic angle to investigate the factors that affect workers to be over-educated or under-educated, the results showed that the differences in the individual characteristics, family characteristics, social network and job characteristics will lead to different matching status. Thirdly I used VV model and Quantile Regression Model to estimate the return of different matching states, it turned out that over-educated earned less than works who were adequately educated, and under-educated earned more than the adequately educated, this gap will be more narrowed as income levels increasing. Finally, I used decomposition method by Melly (2006) to construct counterfactual income distribution function to decompose the income gap, the research found that the education-occupation vertical mismatch is one of the reasons of income gap; as income levels increased, the gap caused by mismatch was narrowing.Therefore, I believed that we can narrow income gap from the perspective of supply and demand of the labor market, such as improving and eliminating the phenomenon of education-occupation vertical mismatch, which would give everyone an opportunity to have full use of one’s faculties.