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Human Capital Allocation and Overeducation: A Measure of French Productivity

  • Economics
  • Education


Human Capital Allocation and Overeducation: A Measure of French Productivity J.P. GUIRONNET∗& N. PEYPOCH† October, 2005 Document de Travail LAMETA 2005-10 Abstract In the last three decades, France has experienced an increase in the numbers of students in further education. In this context, we have cho- sen to quantify the phenomenon of overeducation using a salary-based approach and to measure the impact of the general lengthening in the duration of studies on private sector productivity. The decomposition of the aggregate Luenberger productivity index into technological change and efficiency change reveals an increasing imbalance between salaries and required qualifications. Moreover, while overeducation has become less marked for intermediate and higher occupations, mismatches have increased in the case of the least skilled jobs. JEL: D24, I28, J31. Keywords: overeducation, directional distance function, aggregate luen- berger productivity index. ∗LAMETA, Université de Montpellier 1, Faculté des sciences économiques, Es- pace Richter, Avenue de la Mer, [email protected] †GEREM, Université de Perpignan, Département des Sciences Économiques, 52 Avenue Paul Alduy, 66860 Perpignan Cedex, [email protected] We would like to thank Patrice Bougette for helpful comments. 1 1 Introduction In France, the total number of persons in education has increased at an unprecedented rate during the last four decades. This change is explained by the extension of compulsory education, a diversification of the training available within the educational system and a reduction in selectivity. In 2000, graduates accounted for 36% of those leaving the educational system as opposed to 15% in 1980. This increase in student numbers, combined with the employment crisis of recent decades, has transformed the operation of the labour market: sta- tistical observation leads to the incontestable conclusion that the youngest generations of individuals leaving the educational system,

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