Regional Economic Growth in Malaysia: Does Aggregate Overqualification Matter?

Zainizam Zakariya, Kristinn Hermanssons, Kho Yin Yin, Noor Fazlin Mohamed Noor


This paper explores the impact of aggregate overqualification on regional economic growth in Malaysia from 2005 to 2017 using Dynamic Panel Data (DPD) approach. The aggregate overqualification was gauged as the percentage of workers with at least a bachelor’s degree qualification who employed in an occupation below than the professional job level. Following the method, while the incidence stood at 1 percent, it was however higher in Kuala Lumpur (4.4 percent) and Selangor (3.9 percent) and was much lower in Perak (-0.26 percent) and Perlis (-0.12 percent). Moreover, the incidence was higher after 2010. Empirical findings revealed strong evidence of negative impact of the aggregate overqualification on regional economic growth. Yet, the magnitudes of the effect were smaller, between 0.02 and 0.03. Further analysis revealed the negative impact was greater in most developed states and for the period after 2010. The findings depict that there is a growth penalty for not being fully utilised the knowledge and skills of highly educated workers at the regional labour market.

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Research in World Economy
ISSN 1923-3981(Print)ISSN 1923-399X(Online)


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