The Relationships between Education and Occupation in Iran: an Application of Verdugo-Verdugo Model

In the recent decades, supply of labor force has increased and caused overeducation in Iran. Overeducation is potentially costly for national economy. In this study, using mean realized match (MRM) method and applying International Standard Classification of Occupations (ISCO) based on socioeconomic characteristics survey data (2003), we study the returns on years of schooling, over-education and under-education in Iran by Verdugo-Verdugo model. In this way we use other variables like gender, marital status and ownership (public or private). We find that returns on yearly formal schooling is 9.3% on average. With the same education, the overeducated workers earn less than workers who are not overeducated; and the undereducated workers earn more than workers who are not undereducated. We also fine that experience has positive effect on earning by a decreasing rate; and females and singles earn less than the others.