Do Skill Mismatches Create a Wage Penalty? Alternative Estimates for Korea* |
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Authors: | Hong‐kyun Kim Seung‐jun Park |
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Institution: | 1. Department of Economics, Sogang University, Mapo Gu, Seoul, Korea;2. Department of Economics, Daegu University, Daegu City, Korea |
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Abstract: | In this paper, we estimate the wage penalty of skill mismatches among young Korean workers using propensity score matching (PSM) and ordinary least squares (OLS) methods. OLS estimates suggest that a moderate wage penalty results from skill mismatches: 3.8 percent for men and 5.6 percent for women. In contrast, PSM estimates suggest a weakly significant wage penalty for men and women only when kernel matching (KM) is used, but not when nearest neighbor matching(NNM) or radius matching (RM) techniques are used. These results contradict the findings of previous studies and suggest that there may not be a substantial wage penalty associated with skill mismatches. |
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Keywords: | educational mismatch propensity score matching skill mismatches unobserved individual heterogeneity |
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