Volume 73, Issue 2

The paper investigates into the link between education mismatch and wages in Mauritius. It adds to the existing literature on education mismatch and labour market outcomes by using Mauritius as a case study in Africa, where overeducation is a growing concern, with graduates struggling to find jobs corresponding to their education level and field, the so-called vertical and horizontal mismatches. This supply-demand inadequacy ascends from a mix of factors and one of them can be termed as the ‘diploma disease’. Using the Continuous Multi-Purpose Household Surveys from 2013 to 2017, the pooled estimation results find evidence for a wage penalty of 1.3% for overeducated individuals compared to perfectly matched workers. A wage penalty of around 9.6% is also noted for undereducated workers compared to their perfectly matched counterparts. Heckman two step estimation approach is adopted to account for sample selection bias whilst the instrumental variable two stage least squares is applied to cater for the endogeneity of overeducation. The wage penalty for overeducation and undereducation under Heckman estimation method compares to ordinary least squares estimates with slight differences in the magnitude of the wage penalty. Once we account for endogeneity, the wage penalty for overeducated workers rose to 11% while that of overeducation did not change.

The paper develops a two-sector full employment general equilibrium model with endogenous schooling decisions. It aims to evaluate the effects of educational demand management policies on gender inequality in schooling and wage inequality. The results point towards the role of social norms in shaping parental discrimination against girls’ education, which accentuates gender gap in schooling due to gender-neutral education subsidy and rise in household income induced by foreign capital inflow. The two policies are favourable for gender wage gap if the agricultural sector is more female labour intensive than the manufacturing sector and returns to schooling are considerably higher for women than men. However, gender targeted education subsidy policies are in general beneficial with respect to both gendered schooling and wages. The paper contributes to the literature by identifying the role of factor intensity conditions and gender differentiated returns to education on the gendered schooling and labour market outcomes of demand side interventions in education. It also provides theoretical explanations to diverse impacts of these policies and suggests appropriate policy recommendations.

This paper studies the combined effects of mixed ownership structures and manager delegation on firms’ investment in automation processes in a multi-stage triopoly game. We show that, in accordance with empirical evidence, firms owned by common shareholders invest less in automation and realize lower profits compared to a firm owned by independent shareholders. Direct collusion of owners in terms of coordinated investment increases the profits, the one of the independent firm even more than the profits of the commonly owned firms. Delegation of operational decisions to managers results in higher investment and lower profits. In markets with favorable technological opportunities for automation, common ownership combined with manager delegation leads to the highest social welfare.