Vertical Education-Occupation Mismatch and Wage Inequality by Race/Ethnicity and Nativity among Highly-Educated U.S. Workers

Lu, Yao; Li, Xiaoguang

Despite remarkable educational gains of minorities, ethnoracial wage inequality persists and has even expanded among highly-educated workers. Conventional explanations for this inequality are primarily derived from comparing workers across different educational levels, and are less salient for understanding inequalities within the highly-educated workforce. The present study examines a previously overlooked source of ethnoracial inequality among highly-educated workers: vertical mismatch between workers' educational level and the education requirements for their occupation. Using a longitudinal sample of college graduates from the Survey of Income and Program Participation, we find that vertical mismatch accounts for a large part of racial/ethnic and nativity wage inequality. Specifically, highly-educated minorities (especially blacks and Hispanics) and immigrants (especially those holding a foreign degree) are disproportionately channeled into mismatched jobs and subsequently consigned to such positions. Also, highly-educated Hispanics and Asians, as well as foreign-educated immigrants, face greater wage penalties of vertical mismatch. The findings offer new insights into a key source of ethnoracial and nativity stratification.

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August 29, 2022