The purpose of this paper is to analyze the
effects of undereducation and overeducation on wages. To that end,
we used data from the Transition to Employment Survey (ETVA-2015).
With these data, we first proceeded to identify the downgraded individuals by
the MCA. Then, knowing that the unemployed may have a reservation wage, which will
bias our estimates, we proceeded to estimate a two-stagemodel to correct for
this selection bias. Using this model, we
found that downgrading determines workers’ wages. Undereducation improves
wages, while overeducation reduces them. Based on these results, we
advocated that policymakers should promote more youth placement through
employment agencies and improve the supply of training in order to effectively
meet the needs of firms.
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