Abstract:
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Greater educational accessibility in Thailand has considerably contributed to a
collective higher level of educational attainment of the Thai labor force. Nevertheless,
with the ease of access, the number of workers with overeducation has significantly
risen. Overeducation refers to a situation in which a person’s education attainment
exceeds the requirements of a job, giving rise to a variety of unfavorable outcomes for
individuals, employers and society.
This research examines three research questions: 1) Does the educational
mismatch (i.e., overeducation) exist in Thailand’s labor market?; 2) Is the overeducation
in the Thai labor market demand-driven or supply-driven?; 3) Do overeducated
workers suffer any form of wage penalties and, if so, are the penalties identical across
the earnings distribution? Quantitative analysis is thus employed using the 2006 and
2011 Labor Force Survey datasets. In addition, the samples are weighted so that they
are representative of the entire population.
The classification of mismatched workers in this research work is based on the
correspondence between the International Standard Classification of Occupations
(ISCO) and the International Standard Classification of Education (ISCED) developed
by the Organization of Economic Cooperation and Development (OECD). The
workers are thus classified into overeducated, properly matched, and undereducated
workers. The analysis reveals that the overeducation situation in the country has gone
worse from 6.27% in 2006 to 8.51% in 2011. Workers with a college degree in social
sciences accounted for the largest proportion (60%) of the overeducated employees.
In addition, the likelihood of overeducation is subject to the chosen fields of study, in
which the workers with a tertiary degree in medicine and those with a non-tertiary
science degree are least likely to suffer from overeducation.
Additional attempts are also made to determine the plausible causes of
overeducation to enable a better understanding of the mechanisms by which the
demand and supply forces interacted. The findings identify two determinants of the
current state of overeducation among Thai labor force: higher education being
synonymous with “buying an insurance” and the education inflation. The former has
been responsible for a multitude of workers pursuing college degree with the hope of
finding a securing job, not matched job upon graduation, and the latter, i.e., an
increase in the supply of college graduates lowers wages and leads to overeducation.
Hence, effective management of the supply-side factors is a possible solution to tackle
overeducation in the labor market.
The public sector and policymakers should make efforts to combat the
overeducation problem due to the adverse effects of the mismatch on the workers’
incomes and their employers. This research finds that overeducation induces a negative
effect on the employees’ earnings (i.e., a 30% underpayment) and that the penalties
are different between men and women. Male employees encounter a more severe wage
penalty than their female counterparts. Moreover, the overeducated workers with a
tertiary degree face more severe wage penalties than the overeducated upper-secondary
graduates, inadvertently contributing to the lower between-groups wage inequality.
This research also studies the relationship between overeducation and a lack of
unobserved skills through quantile regression. The findings reveal a significantly
greater negative effect of overeducation on the more skilled workers who are in the
top segment of the wage distribution than those with less skilled of the same
educational level, suggesting the absence of the correlation between overeducation
and the lack of unobserved skills. Also, the greater accessibility to higher education
contribute to an increased within-groups dispersion.
This dissertation concludes with the policy implications for mitigation of the
overeducation problem through effective management of the supply-side factors:
students and educational institutions. Government may increase private costs of
college education in order to reduce the supply of college graduates. To be precise,
government may reallocate its educational budget more to vocational education.
Educational institutions should provide better guidances to students in making the
choices of fields of study in order to reduce the incidence of overeducation. Students
should be provided with job experience in college possibly through cooperative
programs.
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