1. Kahn SEWP October 19 1 Discussion Bender/Heywood Educational Mismatch among Ph.D.s Shulamit Kahn SEWP conference October 18, 2005

2. Kahn SEWP October 19 2 Questions I address Why might people have education/job mismatches? Is each theory of mismatches consistent with these findings? What are the efficiency implications? What are the policy implications?

3. Kahn SEWP October 19 3 1. Technological change means that the education is no longer useful Consistent with: Mismatched  lower wages Mismatched  lower satisfaction Mismatched  later job change What are efficiency implications? Policy implications? We lose the value of SET human capital, but that is probably inevitable and desirable. Does not mean we should educate less. Would argue against academic tenure in science.   

4. Kahn SEWP October 19 4 2. SET education is subsidized or over- encouraged. There aren’t enough jobs. Probably, the people who leave SET are those least productive in SET or most productive elsewhere. Consistent with: Mismatched  lower wages Mismatched  lower satisfaction Mismatched  later job change What are efficiency implications? Policy implications? We lose the cost of the education. We should stop subsidizing SET education (as much).   

5. Kahn SEWP October 19 5 3. Education increases avg productivity (in SET jobs). Post-education, there are random realizations of job offers from both in and outside of education field. Consistent with: Mismatched  lower wages e.g. W f = X + K + e i W m = X + e j Go to highest W K = 1 distribution: ed 0,1,2,3 avg: in field: 3 mismatched: 2.67 Mismatched  lower satisfaction Mismatched  later job change What are efficiency implications? Policy implications? We lose the cost of the education. Great if it were possible to know e’s beforehand (e.g. require job experience before Ph.D.) If not, no policy change will help. (People wouldn’t get educated if it wasn’t a better choice.)   

6. Kahn SEWP October 19 6 4. For some, education is a step to other jobs not in the field. Consistent with: Mismatched  lower wages Mismatched  lower satisfaction Mismatched  later job change What are efficiency implications? Policy implications? There is no suggestion that society is educating too much.  opposite?  

7. Kahn SEWP October 19 7 5. Any group has some losers who aren’t good at anything. They will be more likely not to get good jobs, including SET jobs. Consistent with: Mismatched  lower wages Mismatched  lower satisfaction Mismatched  later job change What are efficiency implications? Policy implications? We lose the cost of the education. Ideally, the educational system would be better at identifying losers. Have potential employers involved in Ph.D. application process? Require job experience before Ph.D.?   

8. Kahn SEWP October 19 8 6. Employers mistakenly do not believe that the person can really do the SET job. Consistent with: Mismatched  lower wages Mismatched  lower satisfaction Mismatched  later job change (for the better) What are efficiency implications? Policy implications? We lose the cost of the education. Requires employers to change attitudes.   

9. Kahn SEWP October 19 9 With age, men (women) in mismatched job see wages slow/fall more (less). i.e. Size of wage mismatch penalty is larger (smaller) for older men (women). 1. Technological change  education useless. 2. SET education is subsidized or over- encouraged. 3. Random post-ed job offers within/outside field (Mick Jagger). 4. Education a stepping stone (Rush Holt) 5. Losers can’t get an SET (or any good) job. 6. Employers misjudge person’s capabilities. Men Women        -- More probably, wage profile is less concave in SET, especially academic, jobs. Could test by interacting age & academic? 

10. Kahn SEWP October 19 10 Women who leave for pay/promotion have more $ (but not happier). Men: a bit (less sig) more $ 1. Technological change  education useless. 2. SET education is subsidized or over- encouraged. 3. Random post-ed job offers within/outside field (Mick Jagger). 4. Education a stepping stone (Rush Holt) 5. Losers can’t get an SET (or any good) job. 6. Employers misjudge person’s capabilities. Men Women --   --   -- 

11. Kahn SEWP October 19 11 Mismatches due to “job not available in field” have less $ and happiness. 1. Technological change  education useless. 2. SET education is subsidized or over- encouraged. 3. Random post-ed job offers within/outside field (Mick Jagger). 4. Education a stepping stone (Rush Holt) 5. Losers can’t get an SET (or any good) job. 6. Employers misjudge person’s capabilities.      

12. Kahn SEWP October 19 12 Mismatches due to changed interests, career: a bit worse off in wage, not happier. 1. Technological change  education useless. 2. SET education is subsidized or over- encouraged. 3. Random post-ed job offers within/outside field (Mick Jagger). 4. Education a stepping stone (Rush Holt) 5. Losers can’t get an SET (or any good) job. 6. Employers misjudge person’s capabilities.   ? ? ? 

13. Kahn SEWP October 19 13 Leaving field for family reasons, job location, working conditions: worse off in wage, less job satisfaction 1. Technological change  education useless. 2. SET education is subsidized or over-encouraged. 3. Random post-ed job offers within/outside field (Mick Jagger). 4. Education a stepping stone (Rush Holt) 5. Losers can’t get an SET (or any good) job. 6. Employers misjudge person’s capabilities. 7. Unexpected developments unrelated to field. 