The Impact of Surplus Schooling on Earnings.

This article presents comments regarding a study that examined the effect of demographic cycles on schooling choices and the timing of school completion using data from the National Longitudinal Surveys of Labor Market Experience and from the Panel Study of Income Dynamics in the U.S. They argue that their empirical results demonstrate that overeducated workers often earn less than their adequately educated and undereducated counterparts. Previous evidence has shown a lower return to either over-or under-education and not a negative return as implied by the study. The authors of the study suggest that the average return to investment in overeducation rises as more years of overeducation are attained. The specification of the earnings function leads both to multicollinearity and to counterintuitive results.