Educational Mismatch And Returns On Human Capital In The Spanish Hospitality And Travel Agency Sectors

Abstract

This paper investigates the importance of returns on human capital and educational mismatch in determining wages in the Spanish hospitality sector and the travel agency sector using an expanded version of the Mincer wage equation (1974). In addition, we analyze the impact of several job characteristics and personal characteristics on wages. Using data from the 2006 Spanish Wage Structure Survey, we estimate separate regressions for each education group under analysis: overeducated, undereducated and adequately educated workers, following the method used by Kiker et al. (1997) and using a procedure similar to that used by Strauss and Maisonneuve (2007). The regressions show specific estimated parameters of the variables included in all wage equations implemented for each analyzed group. Thus, educational mismatch is determinant for the returns on human capital in both sectors and it also has a significant and differential impact on wage formation in each educational group. Moreover, this fact has also been shown in the other variables of the model that represent both the personal characteristics of workers and job-specific characteristics. Therefore, according to the methodology used in our study, the real hourly wage may be quantitatively influenced by the variables in a model depending on whether the educational level of the workers matches the educational requirements of the job performed. Finally, it is important to note that evidence has been found regarding the impact of firm size on wage returns and the data also has provided evidence of wage differentials by gender in the Spanish hospitality industry.