172 M.C. Daly et al. Economics of Education Review 19 2000 169–178
reported the information necessary to calculate their completed education, job-required education, wage rate,
and work experience. To ensure cross-national compar- ability our sample is restricted to non-black men and
women in the United States and West German citizens of German nationality.
2
In addition, we eliminate from the sample students, the irregularly part-time employed,
and the self-employed.
3
These exclusions provide us with samples of 3204 in the US for 1976, 4438 in the
US for 1985, and 3066 in Germany for 1984.
6. The extent of surplus and deficit education over time and across countries
Before examining the returns to surplus education over time and across countries we first describe its
extent. Table 1 presents the distribution of matched, sur- plus, and deficit education in the United States 1976 and
1985 and in Germany 1984 by gender. The extent of overeducation in the United States declined for both men
and women from 1976 to 1985. In 1976 nearly 40 of men and women were overqualified for their job. By
1985 this percentage had declined to a little over 30. This decline was statistically significant at the 5 level.
In contrast, the percentage of men and women with too little education for their job increased during the same
period; growing from 16.3 to 21.2 among men, and from 11.3 to 16.8 for women. This reduction in the
proportion of United States workers with surplus edu- cation and increase in the proportion with deficit edu-
cation occurred despite an increase in the average level of completed schooling.
Education and job mismatches are much less common in Germany. As the two rightmost columns of Table 1
show, German men are about half as likely to be overed- ucated and about 60 less likely to be undereducated
than working men in the United States. The same pattern holds for German women. However, in contrast to the
United States, in Germany it is women, rather than men,
2
The labor market experiences for black Americans and German immigrants have been shown to be significantly differ-
ent from the experiences of non-black Americans and Germans. Since the focus of this paper is on cross-national comparisons
and not on between group differences within the United States or Germany, we have chosen to exclude black Americans and
German immigrants from the analysis. There was no East Ger- man sample in 1984, so they also are excluded from the analy-
sis.
3
In the United States, the irregularly part-time employed are identified as those who work less than 500 hours per year. For
Germany, a direct question from the GSOEP is used to identify those who are irregularly part-time employed. Students and the
self-employed are excluded based on their own identification of their status.
who are more likely to be over- or undereducated. While years of schooling are not directly comparable across
countries, the differences in the average years of surplus and deficit education between men and women in the
United States and Germany indicate that even when mis- matches do occur in Germany the magnitude of the mis-
match is substantially smaller.
4
7. Components of human capital: education and experience
Research carried out by Sicherman 1991 suggests that employers may trade off between formal education
and on-the-job training when hiring new employees. We conduct a similar analysis using total work experience
in place of job tenure. If work experience and job tenure are similar, then workers with the least work experience
should have the highest prevalence of surplus education and workers with the most experience should have the
highest prevalence of deficit education. In Table 2 we report the percentages of men and women who are over-
or undereducated for their position, classified by years of work experience. Work experience is defined as the
total number of full-time or regular part-time years an individual has worked since the age of 18.
As Table 2 shows, workers with the least job tenure or work experience are the most likely to have more
schooling than is required by their job. Likewise, those with the most experience also are most likely to have
too little education. For example, among men with 20 or more years of work experience in 1985, about one-half
were overeducated or undereducated for their job: about one-quarter falling into each category. In contrast,
among men with between 1 and 5 years of work experi- ence, more than 40 had surplus education, while only
17 had too little education for their current positions. The same pattern holds for the United States in 1976
and for Germany in 1984, although the levels are much different. In all cases there is a significant and negative
correlation between work experience and surplus edu- cation and a significant and positive correlation between
work experience and deficit education.
These findings indicate that being over- or underedu- cated is correlated with having less or more work experi-
ence. However, these findings also show that despite similar patterns for the United States in 1976 and 1985,
substantial changes in the levels of surplus and deficit
4
There is no direct comparison between years of education across the United States and Germany. The average years of
surplus education are best thought of as degree levels or certifi- cations. For a good summary of the relationship between the
United States and German educational systems see Couch 1994.
173 M.C. Daly et al. Economics of Education Review 19 2000 169–178
Table 1 Extent of surplus and deficit education in the United States 1976, 1985 and Germany 1984 among working men and women aged
18-64 years
a
United States Germany
1976 1985
1984 Men
Women Men
Women Men
Women Completed education
= required education
45.2 52.0
47.0 49.7
78.8 71.9
Completed education.required education 38.5
36.8 31.8
33.5 14.3
20.7 Completed education,required education
16.3 11.3
21.2 16.8
6.9 7.4
Total 100.0
100.0 100.0
100.0 100.0
100.0 Average years of completed education
12.8 12.7
13.4 13.3
11.7 11.5
Average years of required education 11.1
11.0 12.5
12.1 11.6
11.1 Average years of surplus education for those
5.6 5.4
4.7 4.9
2.2 2.6
with surplus education Average years of deficit education for those
3.0 2.5
2.8 2.7
0.7 0.7
with deficit education
a
All tests for differences in values over time and across countries were significant at the 5 level. The US sample consists of non-black men and women who were either heads or wives partners in a PSID household in the interview year. The German sample
consists of West German men and women. Source: Panel Study of Income Dynamics 1976, 1985 and the German Socio-Economic Panel 1984.
Table 2 Extent of surplus and deficit education in the United States 1976, 1985 and Germany 1984 among working men and women aged
18-64 years by work experience since age 18
a
United States Germany
1976 1985
1984 Work experience
Men Women
Men Women
Men Women
Surplus education 1-5 years
45.4 43.1
38.6 36.5
18.8 31.0
5-10 years 45.7
37.2 34.1
38.5 13.9
17.9 10-15 years
39.4 33.6
34.7 34.7
11.9 14.3
15-20 years 41.9
43.7 38.9
29.3 13.5
20.7 20 or more years
33.7 31.1
26.9 30.2
14.1 21.3
Correlation: work experience and amount of 20.13
20.01 20.10
20.05 20.09
20.12 surplus education
Deficit education 1-5 years
9.8 7.8
17.0 8.0
5.5 2.4
5-10 years 6.6
7.3 15.4
11.0 3.7
5.8 10-15 years
13.0 11.6
15.1 14.0
5.0 5.0
15-20 years 10.0
8.3 13.2
22.2 4.2
7.7 20 or more years
23.4 19.6
28.5 23.1
9.2 14.2
Correlation: work experience and amount of 0.22
0.17 0.23
0.14 0.12
0.16 deficit education
a
Asterisks represent significance at the 5 level. The US sample consists of non-black men and women who were either household heads or wives partners in a PSID household in the interview year. The German sample consists of West German men and women.
Source: Panel Study of Income Dynamics 1976, 1985 and the German Socio-Economic Panel 1984.
174 M.C. Daly et al. Economics of Education Review 19 2000 169–178
education occurred. Thus, by 1985 a substantially larger percentage of men with little work experience also had
a deficient education for their current job. Finally, as Bu¨chel and Weißhuhn 1997a, 1997b found, a signifi-
cantly larger fraction of German women than German men are overeducated.
8. Economic value of surplus and deficit education
