Wage effects of educational mismatch and job search in Ghana and Kenya

Abstract

Education is key to development strategies in Africa. We use overeducation and undereducation to analyse the effectiveness of education in preparing individuals for employment in Kenya and Ghana, using the Skills Towards Employment and Productivity Survey. Systematic differences in wages between matched, overeducated and undereducated workers hold across attainment levels, even controlling for cognitive skills. Overeducated workers are rewarded above exactly matched workers, partially supporting human capital theory. Undereducated workers are compensated over their education level, following the job competition model. Obtaining a job through social networks is widespread, but associated with lower wages for the overeducated and exactly matched.