Quantitative overeducation and cooperative game theory

- We use coalition structure games to model the bargaining after the training.
- A production function with a flat increase is accompanied by quantitative overeducation.
- Public training programs have a higher impact in branches with high marginal productivity.

Overeducation is an empirical phenomenon in two dimensions: qualitative and quantitative. Quantitative overeducation addresses a firm's decision, to train more employees than needed. One explanation for this decision is modeled in this article-that of classical bargaining power. The main idea is that after investing in human capital the employer uses employees outside the firm to raise the bargaining power when he negotiates with the employees within the firm on how to share the profit of the firm. To model this, we use cooperative game theory for the first time. The labor market is modeled by a coalition structure and the payoffs are determined by the χ value (Casajus, 2009).