EMNES Working Paper 012
Education is an investment and its returns, in terms of increased wages, can be used as an indicator of productivity in an economy. Also, skills utilisation is important for productivity and whenever there is a misalignment between the skills demanded and those available, it is spoken of as skills mismatch. This paper provides an overview on skills mismatch and estimates gender differences in the returns to education in Jordan. The econometric analysis is hereby based on the estimation of fixed effects’ models on a set of pseudo panel data, covering the period between 2000 and 2015. The findings reveal that returns to education for male employees are higher than for female employees (the wage premium from one additional year of schooling is 6.8% for males and 5.4% for females) and that, on average, females are paid 74% of what males earn. We explain this result based on some peculiarities of female participation in Jordan’s labour market. Concerning skills mismatch, the analysis points to the existence of over-education and under-skilling.