THE IMPACTS OF OVER-EDUCATION ON ECONOMIC GROWTH IN MALAYSIA

Abstract

This article is developed purposely to explore the impacts of over-education on economic growth in Malaysia. Therefore, the sample data utilized is the Time Series Data from the period of 1984 to 2016 gathered from other reliable sources. Moreover, this study incorporates several different tests of empirical methods which are Augmented Dickey Fuller (ADF) and Philip Perron Unit Root Test, Johansen Co-Integration Test and Vector Error Correction Model (VECM) Test. As a result, the finding derived from Johansen Co-Integration Test has illustrated that there is a long-term relationship between the impact of over-education and the country’s economic growth in time series data. Furthermore, the VECM Test has indicated that over-education has a long run causality with GDP. However, the results obtained from the Wald Test present that GDP is not influenced by over-education but, the reverse is true where over-education is influenced by GDP at 0.01 significance level. Hence, overall, there is a negative long term relationship between over-education and economic growth in Malaysia