

Celebrating humanity's flourishing through the spread of capitalism and the rule of law
17 Sep 2015 Leave a comment
in economics of crime, economics of education, human capital, labour supply, occupational choice, poverty and inequality Tags: behavioural genetics, crime and punishment, criminal deterrence, economics of early childhood education, economics of families, economics of fertility, economics of personality traits, marriage and divorce, single parents


14 Sep 2015 Leave a comment
in economics of education, human capital, labour economics, labour supply, occupational choice, politics - New Zealand Tags: College premium, education premium, graduate premium
How much more will you earn by going to university? It depends hugely on which country you're from http://t.co/7RMnUTM8nj—
paulkirby (@paul1kirby) September 11, 2015
10 Sep 2015 Leave a comment
in discrimination, economic history, economics of education, gender, human capital, labour economics, labour supply Tags: British economy, gender wage gap
10 Sep 2015 Leave a comment
How high is the US #tax burden on labor? Here's an OECD comparison tax.foundation/1LNpE4W by @samcjordan_ @kpomerleau http://t.co/unaxWM1BgH—
Tax Foundation (@taxfoundation) July 27, 2015
Payroll taxes make up a large portion of a worker's #tax bill: tax.foundation/1g1nd1w by @samcjordan_ @kpomerleau http://t.co/yHx4kQTmr6—
Tax Foundation (@taxfoundation) July 21, 2015
via A Comparison of the Tax Burden on Labor in the OECD | Tax Foundation.
09 Sep 2015 Leave a comment
in discrimination, economic history, gender, human capital, labour economics, labour supply, occupational choice Tags: asymmetric marriage premium, gender wage gap
05 Sep 2015 Leave a comment
in economics of education, human capital, politics - USA Tags: economics of teachers
01 Sep 2015 Leave a comment
in economic growth, economics of education, human capital, labour economics, macroeconomics Tags: educational attainment, endogenous growth theory, human capital, knowledge capital
01 Sep 2015 Leave a comment
in applied welfare economics, human capital, labour economics, poverty and inequality Tags: envy, top 1%
30 Aug 2015 Leave a comment
in economics of education, human capital, labour economics, labour supply, occupational choice Tags: literacy and numeracy, PISA, reading and writing
20 Aug 2015 1 Comment
in applied price theory, applied welfare economics, human capital, labour supply, politics - New Zealand, public economics Tags: family tax credits, lost decades, taxation and the labour supply
21% would have been a good guess of the average and marginal tax rates of the New Zealand single earner or couple including with children and even a second earner in 2001. New Zealand average and marginal tax rates have been on a wild ride since the year 2000.

Sources: OECD StatExtract and OECD Taxing Wages.
As the above chart shows, while the average tax rate of a single earner with no children is pretty much unchanged at about 20%, he now faces a marginal tax rate of 30% or more rather than 21% in 2001.
For a married couple with one income, as the above chart shows, their average tax rate has been about zero for a good 10 years now but their net marginal tax rate is a good 50% or more because of abatement rates on family tax credits, which is a skewed incentive situation. A large income effect from the family tax credit encourages the consumption of leisure but a high marginal tax rate discourages working more.

Sources: OECD StatExtract and OECD Taxing Wages.
For two earner couples, their average tax rates have fallen because of family tax credits but their marginal tax rates have gone through the roof as the above chart shows. A tax system that discourages quite severely any further work or investment in human capital by average earners may have adverse effects on the long-term trend growth rate of New Zealand.
20 Aug 2015 Leave a comment
in applied price theory, human capital, income redistribution, labour economics, labour supply, politics - USA, poverty and inequality, Public Choice, rentseeking, sports economics Tags: expressive voting, Left-wing hypocrisy, Leftover Left, mass kidnappings, Occupy Wall Street, rational ignorance, rational irrationality, superstar wages, superstars, top 0.1%, top 1%
Ratio of Median Salary of Top 25 Highest Paid MLB Player to Avg. Worker Pay Increased from 100:1 to 700:1 Since 1988 http://t.co/5zLktBXS3D—
Mark J. Perry (@Mark_J_Perry) August 18, 2015
19 Aug 2015 2 Comments
in economics of bureaucracy, economics of education, human capital, job search and matching, labour economics, labour supply, occupational choice, politics - USA, Public Choice Tags: British economy, Canada, compensating differentials, job shopping, offsetting behaviour, on-the-job training, search and matching, The fatal conceit, The pretense to knowledge
In the UK, foreign-born are much more likely to be over qualified than native born highly educated not in education with less difference between men and women. More men than women are overqualified for their jobs in the UK. Over qualification is less of a problem in the UK than in the USA and Canada.
Source: OECD (2015) Indicators of Immigrant Integration 2015: Settling In.
In the USA and Canada, there are few differences between native and foreign born men in over-qualification rates. Foreign-born women tend to be more over-qualified than native born women in the USA and more so in Canada. Many more workers are overqualified for their jobs in the USA and Canada as compared to the UK.
There are large differences in the percentage of people with tertiary degrees and the education premium between these three countries that are outside the scope of this blog post. These trends may explain differences in the degree of educational mismatch.
It goes without saying that the concept of over-qualification and over-education based mismatch in the labour market is ambiguous, if not misleading and a false construct.
To begin with, under human capital theories of labour market and job matching, what appears to be over-schooling substitutes for other components of human capital, such as training, experience and innate ability. Not surprisingly, over-schooling is more prominent among younger workers because they substitute schooling for on-the-job training. A younger worker of greater ability may start in a job below his ability level because he or she expects a higher probability to be promoted because of greater natural abilities. Sicherman and Galor (1990) found that:
overeducated workers are more likely to move to a higher-level occupation than workers with the required level of schooling
Investment in education is a form of signalling. Workers invest so much education that they appear to be overqualified in the eyes of officious bureaucrats. The reason for this apparent overinvestment is signalling superior quality as a candidate. Signalling seems to be an efficient way of sorting and sifting among candidates of different ability. The fact that signalling survives in market competition suggests that alternative measure ways of measuring candidate quality that a more reliable net of costs are yet to be discovered.
A thoroughly disheartening chart if you're a graduate in the UK i100.io/mpDbJAl http://t.co/mv9izA0mbc—
i100 (@thei100) August 20, 2015
Highly educated workers, like any other worker, must search for suitable job matches. Not surprisingly, the first 5 to 10 years in the workforce are spent in half a dozen jobs as people seek out the most suitable match in terms of occupation, industry and employer. Some of these job seekers who are highly educated will take less suitable jobs while they search on-the-job for better matches. Nothing is free or instantly available in life including a good job match.
A more obvious reason for over qualification is some people like attending university and other forms of education for the sheer pleasure of it.
Anyone who encounters the words over-qualified and over-educated should immediately recall concepts such as the pretence to knowledge, the fatal conceit, and bureaucratic busybodies. As Edwin Leuven and Hessel Oosterbeek said recently:
The over-education/mismatch literature has for too long led a separate life of modern labour economics and the economics of education.
We conclude that the conceptional measurement of over-education has not been resolved, omitted variable bias and measurement error are too serious to be ignored, and that substantive economic questions have not been rigorously addressed.
19 Aug 2015 Leave a comment
in economics of religion, gender, human capital, labour economics, labour supply, occupational choice, poverty and inequality, welfare reform Tags: female labour force participation, female labour supply, France, gender gap, Germany, Greece, Italy, Portugal, Spain, Turkey
Vanishing effect of #religion on the labor market participation of European women newsroom.iza.org/en/2015/08/10/… http://t.co/25nx8NiEfk—
IZA (@iza_bonn) August 10, 2015
15 Aug 2015 Leave a comment
in economics of love and marriage, human capital, labour economics, law and economics, welfare reform Tags: child rearing, economics of families, marital division of labour, marriage and divorce
More time with mom has little to no effect on children's well-being: thesocietypages.org/socimages/2015… http://t.co/zyirz1QvQs—
(@SocImages) April 08, 2015
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