MIDDLE EAST TECHNICAL UNIVERSITY

Department of Economics Seminar Series 

"Educational Mismatch and Earnings Distribution in the Turkish Labor Market"

by

Gülbin Erdem Karahanoğlu

(İstanbul Medeniyet University)

Date: May 5, 2025 (Monday)

Time: 14:00

Place: F106, FEAS - Building A

Abstract

"This study provides a comprehensive empirical analysis of educational mismatch and its implications for earnings across the wage distribution in the Turkish labor market. Utilizing Turkish Household Labor Force Survey (THLFS) data spanning 2014-2020, this research addresses notable gaps in the literature, particularly the limited application of advanced econometric methods to emerging market contexts such as Türkiye. Methodologically, the primary contribution of this study lies in employing Unconditional Quantile Regression (UQR) with the Recentered Influence Function (RIF) approach, thereby expanding beyond mean-based analyses to capture heterogeneous wage effects across quantiles. This technique explicitly addresses unobserved heterogeneity and provides deeper insights into how mismatch impacts vary significantly at different wage levels. Empirical findings underscore that educational mismatches including both overeducation and undereducation impose substantial and varying penalties across the wage distribution. The results indicate that wage penalties due to mismatch are not uniform, with overeducation disproportionately affecting lower-wage workers, reflecting limited opportunities for surplus skill utilization at these income levels. Conversely, the penalties for undereducation intensify towards the higher end of the wage distribution, highlighting severe implications for high-wage workers lacking formal educational qualifications matching their roles. The magnitude and direction of these mismatch penalties differ significantly depending on the specific quantile analyzed, reinforcing the importance of employing methods sensitive to distributional heterogeneity rather than relying solely on average effects. Moreover, sensitivity analyses also confirm the robustness of these core UQR findings, further validating that standard mean-based econometric techniques systematically underestimate the true economic costs associated with educational mismatches."