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This paper uses panel data and econometric methods to estimate the incidence and the dynamic properties of over skilling among employed individuals. The paper begins by asking whether there is extensive over skilling in the labor market, and whether over skilling differs by education pathway. The answer to both questions is yes. The paper continues by asking whether over skilling is a self-perpetuating labor market state (state dependence), and whether state dependence differs by education pathway. The paper uses dynamic random effects probit which includes Mundlak corrections and it models the initial conditions following Heckman's method.
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