The research paper titled “Impact of Education Mismatch on Earnings: Evidence from Pakistan’s Labor Market” examines the relationship between education mismatch and earnings in Pakistan. The study aims to provide insights into the impact of education mismatch on the labor market and the earnings of individuals.
The paper highlights that Pakistan have made significant investments in their education sector to enhance human capital. However, due to poor governance institutions, stagnant labor markets, and low educational quality, the additional years of schooling may not necessarily translate into increased human capital.
The study challenges the assumption that additional years of schooling always lead to higher earnings, as it explores the phenomenon of education mismatch in the labor market. Education mismatch refers to situations where individuals are either overeducated or undereducated for the tasks they perform in their occupations.
Using the methodology of Duncan and Hoffman, the research examines the impact of education mismatch on earnings by analyzing data from the Pakistan Social Living Measurement (PSLM) survey. The findings indicate that while overeducation initially yields positive returns, these returns diminish once unobserved heterogeneity bias is taken into account. This suggests that overeducated workers may have lower average ability levels, which affects their earnings.
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