Education and Earnings in Panama: The Role of Education-Occupation Matches

Overview & Synopsis

Education is typically associated with higher earnings, but its impact decreases when there is a mismatch between education and occupation. This study explores the relationship between schooling and earnings in Panama, where recent reforms and economic growth have expanded both the supply and demand for educated workers. While additional education generally raises earnings, the effect is smaller in cases of overeducation. Our findings are consistent with studies from Mexico, with one key difference: despite both countries expanding educational opportunities, Panama saw a rise in higher-level occupations, whereas Mexico did not. The study also highlights a significant gender pay gap.