Journal Article
No. 2007-13 | November 13, 2007 (Version 2: October 01, 2008)
Wage Dispersion, Over-Qualification, and Reder Competition


The expansion of higher education in the Western countries has been accompanied by a marked widening of wage differentials and increasing over-qualification. While the increase in wage differentials has been attributed to skill-biased technological change that made advanced skills scarce, this explanation does not fit well with the observed increase in over-qualification which suggests that advanced skills are in excess supply. By “Reder-competition” I refer to the simultaneous adjustment of wage offers and hiring standards in response to changing labor market conditions. I present a simple model of Reder competition that depicts wages as driven by labor heterogeneity, rather than scarcity. The mechanism may give rise to a simultaneous increase in wage differentials and over-qualification.


Data Set

  • Calculations.pdf
    calculations in pdf [application/pdf, 53K]
  • Calculations.nb
    calculations in nb (Mathematica Notebook file) [text/plain; charset=US-ASCII, 20K]

JEL Classification:

D43, J31, J63


  • Downloads: 6282 (Discussion Paper: 3661)


Cite As

Ekkehart Schlicht (2008). Wage Dispersion, Over-Qualification, and Reder Competition. Economics: The Open-Access, Open-Assessment E-Journal, 1 (2007-13): 1–22 (Version 2).

Comments and Questions

Ekkehart Schlicht - Revision Report
October 01, 2008 - 10:59

see attached file