Volume 44, Number 174,
July-September 2013
Salary Gaps in Uruguay: Gender, Segregation
and Unequal Labor Qualifications
Alma Espino
Job Skill Mismatch

Skill mismatch is understood as the existence of under or over-qualified employees with respect to the positions they occupy, which can be expressed in labor productivity, unemployment and remuneration. Labor qualifications are obtained in a formal system and in the development and accumulation of professional skills in the workplace or through socialization. Appropriate qualification, over-qualification and under-qualification are concepts linked to the specific features of a position, and as such, these situations can be modified.

Skill mismatch has been explained from different theoretical perspectives, such as human capital theory, signaling, job competition theory, search and matching, and more (Leuven and Oosterbeek, 2011).

Analysis of skill mismatch and its effect on salaries has been carried out with models that include over-qualification and under-qualification, as well as over, required and under-education (oru) to explain salary differences (Verdugo and Verdugo, 1989; Hartog, 2000; Groot and Maassen, 2000). The results obtained have shown that salary differences not only hurt those who have achieved a higher level of formal education than what is required for the job (over-qualified), but also tend to benefit those with education below what is required by the job (under-qualified) (Cohn and Kahn, 1995; Allen and Van der Velden, 2001). Other works indicated that years of over-education have a positive return, although below that of the years required for the job, while years of under-education have a negative return (Duncan and Hoffman, 1981; Hartog and Oosterbeek, 1988; Sicherman, 1991; Cohn and Ng, 2000; Daly, Büchel and Duncan, 2000; Groenelveld and Hartog, 2004).

Although differences in education between the genders have been key for much of the analysis of salary gaps, it is less common to consider skill mismatch.2 In Uruguay, the topic of mismatch has recently been covered by Espino (2011), whose work found that the probability of being over-qualified is greater among women, who are more likely to enjoy a greater number of years of formal education than what is required for their professional activities, while men tend more towards under-qualification. This situation has been verified in various studies (Hertz et al., 2008). In Latin America, the underrepresentation of females in manager positions and the overrepresentation of women in occupations such as service jobs, administrative staff, domestic workers and other sectors of activity is not in accordance with their educational levels (Ñopo, 2012).

Johansson and Katz (2007) researched educational imbalances and their effects on salary differences between genders and returns on education in Sweden between 1993 and 2002, finding similar results with respect to the trends for women and men. Breakdowns of salary gaps by gender with adjustment for skill mismatch reduce the gap by between one-tenth and one-sixth, which is between one-third and half of what segregation contributes by sector of economic activity.


In order to measure occupational segregation and its evolution, the Duncan index was calculated. Then, the effect of segregation on salary gaps was estimated using Bayard et al. (2003), and including the Heckman correction for selection bias. Finally, after estimating the probability of being over or under-qualified, salary regressions were developed to take into account these aspects (oru), with special consideration for the role these play in labor segregation results by gender. The results were also broken down to explain the factors that delineate the differences between men and women.

Measuring Segregation

This work presents measures of labor segregation using the Duncan dissimilarity index (di) (Duncan and Duncan, 1955), which measures the average size of the differences between the observed situation for a determined sector of the workforce and a reference value that is assumed as optimal. It is calculated as follows:


2 The neoclassical model of home specialization has been used to explain why women have a greater probability of being over-qualified, relating this to, for example, the options of specific markets (Frank, 1978). One discussion on this perspective can be found in Büchel and Battu (2002).

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PROBLEMAS DEL DESARROLLO. REVISTA LATINOAMERICANA DE ECONOMÍA, Volume 49, Number 195 October-December 2018 is a quarterly publication by the Universidad Nacional Autónoma de México, Ciudad Universitaria, Coyoacán, CP 04510, México, D.F. by Instituto de Investigaciones Económicas, Circuito Mario de la Cueva, Ciudad Universitaria, Coyoacán,
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