Vertical and Horizontal Educational Mismatches of Female Graduates in Taiwan

Abstract

This study considers both vertical and horizontal educational mismatches, with the former referring to overeducation and undereducation, and the latter to the mismatch between college major and job. It is found that the wage premium of the vertical educational match is greater than that of the horizontal educational match. A better vertical match augments the wage premium of an improvement in the horizontal match, and vice versa. The horizontal educational mismatch appears to be an extended scenario of overeducation because graduates from colleges with low rankings have a higher probability of being vertically overeducated as well as horizontally mismatched. Graduates from highly-ranked colleges are privileged to not only have high earnings but also to have low probabilities for the vertical and horizontal mismatches. These low probabilities indirectly raise their earnings. The indirect effects of academic characteristics on earnings are calculated. The approach we propose provides an insight into how academic characteristics comprehensively influence earnings.© 2014 East Asian Economic Association and Wiley Publishing Asia Pty Ltd.