Premiums and penalties for surplus and deficit education - Evidence from the United States and Germany

An intriguing finding ih the literature on the role of education in the lab or market concerns workers who have acquired either more or less education than they say their jobs require. Contrary to predictions from a rigid, str uctural view of jobs, several authors have found that the labor market rewa rds workers for having completed more schooling than their jobs require and penalizes workers who have 'too little' schooling. We investigate whether the structural changes in the labor market in the United States over the 19 70s and 1980s (see Levy, F., & Murnane, R. (1992). US earnings levels and e arnings inequality: a review of recent trends and proposed explanations. Jo urnal of Economic Literature, 30, 1333-1381) affected the rewards and penal ties associated with having too much or too little schooling for a job. We then examine whether the same rewards and penalties for surplus and deficit education observed in the United States apply in Germany, a country with a much more structured educational system and labor market. We test explicit ly for differences over time in the United States and at a point in time be tween the United States and Germany. We find, consistent with a universalis tic view of labor markets, more similarities across countries than over tim e. (C) 2000 Elsevier Science Ltd. All rights reserved.