This paper estimates the returns to education inflation of workers in the labour market of selected services sector in Malaysia. Using a cross-section data of workers from a representative recent survey carried out with the financial support of FRGS 2007-2008, we compare educational attainment of workers and educational requirements of various occupations reported by workers in order to obtain a general specification of the earnings function. The results show that in an earnings specification model that includes the possibility of mismatch between educational attainment and requirement or known as \u2018education inflation\u2019, the rate of return to schooling is 13.8%. The penalty in the rate of return to education of every year of workers with education inflation is estimated at \u20132.76 percentage points. Nevertheless, since the net return is still positive, then education inflation cannot really be considered education surplus.<\/p>\n","protected":false},"template":"","tags":[172,173,175,171,174],"jel-code":[],"article-type":[1329],"class_list":["entry","author-jem","post-2191","article","type-article","status-publish","tag-education-inflation","tag-education-surplus","tag-graduate-unemployment","tag-human-capital","tag-over-education","article-type-normal-article"],"yoast_head":"\n