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Return to education and education mismatch in Indonesia

Mugijayani, Widdi 2020. Return to education and education mismatch in Indonesia. PhD Thesis, Cardiff University.
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This thesis aims to examine the effects of education expansion on labour market outcomes in the waged sector in Indonesia between 2000 and 2014 (the conditions before and after the education reform) using the Indonesia Family Life Survey (IFLS) data. Chapter 3 finds the return to education increases with education level based on Mincer wage equation with OLS model. However, the return to education tends to decline for most education levels during the period of education expansion, consistent with an increase in the supply of educated labour. By sector, the return to education is generally higher in the public sector than in the private sector, possibly due to the lack of competition in the former. The findings are robust to accounting for the endogeneity of education and selection into the labour market. Chapter 4 analyses both undereducation and overeducation resulting from education mismatch. It is found that the mismatch increases with the main driver being the increase of undereducation between the periods, based on Realised Match (RM) – mode and mean. This study also finds that education mismatch is determined by age, sector and firm size based on the Multinomial Logit (MNL) model; consistent with the Assignment Models. Yet, the determinants are sensitive to the different methods used, the sector/gender and the periods. Chapter 5 finds both overeducation and undereducation incidences affect the labour wages, based on the Overeducation–Required–Undereducation (ORU) model (Duncan and Hoffman, 1981) with several panel methods. The return to one year of surplus schooling is the same with the return to an additional year of required schooling, and the return to one year of deficit schooling is negative and significant with the absolute value lower than the return to an additional year of required schooling. The results are sensitive to accounting for unobserved individual heterogeneity (fixed effects).

Item Type: Thesis (PhD)
Date Type: Completion
Status: Unpublished
Schools: Business (Including Economics)
Uncontrolled Keywords: Return to Education Education Mismatch Wage Premium Wage Penalty Overeducation Undereducation
Date of First Compliant Deposit: 7 May 2020
Date of Acceptance: 30 April 2020
Last Modified: 07 May 2020 08:29

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