A Research About The Punishment Effect On Wages Of Overeducation

Since 1999,the continuous expansion of Chinese higher education scale,speed up the process of popularization of higher education in our country.Though it helps millions of university students achieve the dream,at the same time it also had a certain influence on college students' employment:not only the part of college students' employment,unemployment problems,at the same time there also exist quite a few college students engaged in jobs which does not match theireducation level,thus the excessive education appeared.Overeducation was first put forward by Freeman(1976):the college students have the higher education level than their work require.Due to the expansion of higher education in the developed countries earlier,excessive education theory is relatively mature.The research about excessive education is roughly divided into three ideas:the first is focused on how to accurately measure the degree of match between education and job to identify the authenticity of excessive education.Duncan and Hoffman(1981),Verdugo and Verdugo(1989),Jensen(2003),etc.;The second is based on the classical theory in labor economics model to discuss the reason of excessive education and their state dependence.Jovanovic(1979),Cheman&Galar(1990),Jansen&Jimeno(2009),etc.Finally many scholars focus on the analysis of the effect of excessive education in micro and macro level,the focus is on wage penalty effect of excessive education and the rising wage inequality of higher education.Leuven&Oosterbeek(2011),etc.In research on effects of overeducation punishment for wages,most empirical studies used cross-section data analysis,and in foreign countries,Verhaest and Omey(2012)analysed the young workers Flemish longitudinal database,and similar results were obtained:omitted variable problem will cause the deviation upward,but measure error will cause a downward bias,both will offset each other.Finally,Korpi and Tahlin(2009)made a research by using the Swedish longitudinal database(1974-2000),the result is:when the differences in ability is controlled,the influence of mismatch on wages does not actually change,and wage penalty effect will not fade over time.Compared to foreign higher education development course,the time of China's higher education stepping into the threshold of popularization is shorter,and because of the lack of micro data,most of the research is focused on the cross section data.But cross section data analysis cannot solve the unobserved heterogeneity problem of micro data.In view of this,this article which is based on the latest research literature at home and abroad,based on the Chinese Family tracking(China Family Panel Studies,CFPS)2010,2012,2014 Panel data,measure the present situation of excessive education in our country,and analyses the effect of the penalties for salary education in our country that does not match in econometric ways.This paper is based on the average method to measure the excessive education in our country,the results shows that in 2010 China's excessive education rate is 19.68%,14.43%in 2012,21.81%in 2014.Overall,the increased incidence of excessive education in our country present always.This article about excessive education punishment for wage effect results show that by comparing the hybrid model,the random effects model,the fixed effects model and instrumental variable estimation,when excessive education level measured by the average method,hybrid model estimation results and random effects model estimation results are similar,for random effects model,when the demand of education increase one year,lwage increase by 27%,while excessive education increase one year,wage increase by 16.7%,when the undereducation increase one year,wages will be reduced by 6.5%.In the fixed effect estimate,however,after removing the omitted variable bias,when the demand of education increase one year,wage increase to 30.3%,for overeducation,slightly rose to 17.9%,when the undereducation increase one year,wages will dropped to 6%.When measured by applying the method of average and mode method,the appropriate education,overeducation,years of lack education,the model based on instrumental variable method to estimate fixed effects ORU model shows that:the absolute value of coefficient increases,implies the existence of local deviation.And when instrumental variable method is used to remove measurement error,the regress result of demand years of education and years of overeducation will be declined.,specific performance is that the demand of education increase one year,wages will rise by 17.4%,while excessive education increase each year,wages will rise by 4.7%.When we control the omission bias and measurement error,wage penalty effect of education is further.To talk on the influence of the business interruption on mismatch education,namely whether occupational mobility hyothesis was established in our country.We estimate a multivariate Logit model.In addition to the introduction of common variables(gender,age,experience),we have the interestes in the effects on overeducation and undereducation of:(a)because of job change job(because employees' willingness to jump is clear,in the middle of the window period may not be long),and(b)the change of employment status,in view of the limitations of data acquisition,this refers to resign.We assume from the resignation to employment,including general and specific human capital loss.The empirical results show different from expectations,for employment changes and activity state transition effect on the occurrence probability of excessive education and lack of education,most results are not significant,only the level of the secondary education,resign effect on the incidence of insufficient education is significant.So,our data do not support professional liquidity hypothesis,this may because defections and intention of resigning in our country,the idea is different from other countries.In this article we do a research to test if mismatch education and human capital related,to verify the feasibility of the compensation hypothesis of human capital in our country,we connect the mismatch education with four indicators of human capital.The first one are standard project:Labour market experience,on behalf of the general skills;the other three measure are health problems,language expression ability and understanding ability.The results show that the excessive education and general skills are related.As the table above:when workers demand for education increase each year,experience increased by 8.1%,interpreted as:the higher the demand for the employee's education,the work level is higher,so the work of the employees in experience level is higher,the education level and ability to work has a strong positive correlation,required level of education,though less still significantly positive,when the denmand for the education increases each year,oral ability increase 9.5%.Excessive education and health have less similar negative relationship,and for the return of the match was not significant,the absolute value of coefficient in the return of the insufficient education is greater than excessive education regression,it means health has more impact on insufficient education.Understanding ability and oral communication ability have similar regress.The result approve of the human capital compensation hypothesis.Excessive education affects the family decision-making of education,vocational satisfaction and reduce the labors' health,reduce the social resource allocation efficiency,in turn,affects the entire social and economic development,in order to reduce the negative impact of excessive education,this paper puts forward the following policy implications:firstly,adjust the structure of expenditure on education,improve education funds' expenditure structure in higher education,secondary education and basic education level,increase of investment in the basic education and mechanic vocational training.Secondly,speed up the upgrading of industrial structure,provide more employment opportunities to reduce the incidence of excessive education for a higher education level of the community.Finally,the main body of education investment should be fully change ideas,do not use higher education as the only option,human capital investment should be combined with market demand,to avoid educational economic value of the loss which is brought by excessive education.The main contributions of this article can be summarized as follows:(1)using the consistent estimator stresse omitted variable problem found in the literature and the measurement error problem(2)trying to coordinate the relationship between the competition theory and human capital theory.And then develop a new perspective for explanation of mismatched education's effect on wages.