Overskilling and Overeducation In Malaysia

Using a workplace survey from Malaysia (the 2007 Productivity Investment Climate Survey), this paper examines the incidence, determinants and consequences of overskilling in the Malaysian manufacturing sector. The degree of overskilling is found to be low relative to other comparable countries and lower among the more highly educated but higher among those who are overeducated. Workplace characteristics such as share of workforce with university qualifications, hiring practices, capital intensity, and degree of competition, all seem to have an impact on the probability of overskilling. Overskilling is also found to reduce an individual’s earnings and has a negative impact upon firm performance.