Abstract
The paper explores the incidence of over and under education and the effect on earnings for immigrants and natives who hold UK qualifications, drawn from the Quarterly Labour Force Survey 1993–2003. The paper also compares earnings penalties associated with over and under education across immigrant and minority ethnic groups for men and women. The results show that compared to Whites, Black African, Other Non-White and Indian men are more likely to be over-educated, whilst for women it is Indian and Pakistani/Bangladeshi's who are more likely to be over-educated. Estimating earnings equations shows significantly large over-education penalties for South Asian immigrant and native men, as well as White immigrant men, Black women and White UK born women. However, there are large returns to occupational skills for some minority ethnic and immigrant groups, over and above the returns to qualifications. It is suggested that these groups may therefore find it easier to find a suitable job for their UK education level if higher or further education programmes for immigrants were combined with occupational specific training.