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

Abstract

Abstract 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. This 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.