The effects of over-education on earnings in the graduate labour market

This paper uses a new survey of graduates from one large civil university in the UK to examine the determinants of over-education and its subsequent impact on labour market earnings. Multiple measurements of over-education were collected to assess the effect of measurement error on the estimated pay penalty associated with over-education. Panel estimates suggest that the upward bias in standard OLS estimates is offset by an equal downward bias resulting from measurement error.