Educational Mismatch and the Earnings Distribution: Where Does the Mismatch Bite?

This paper focuses on the interrelationship between educational mismatch and earnings taking two new approaches. First, we examine decompositions of the mismatch wage gap, finding that characteristics explain less than half of the mismatch penalty. Second, we use quantile regression to examine the mismatch penalty across the earnings distribution, showing that the penalty shrinks as the position in the earnings distribution increases. Different reasons for mismatch show heterogeneity in the penalty at the mean and at different points in the distribution with larger penalties for being mismatched due to working conditions, location, family, and no available job.