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Good Enough Jobs: Skill Mismatch and Two-Sided Heterogeneity in Frictional Labor Markets

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  • Jacklyn Buhrmann

Abstract

In this paper, I explore the existence and prevalence of skill mismatch in the labor market both empirically and theoretically. Using data from the NLSY97 and O*NET, I show that while there is some degree of positive sorting, matching is far from perfect. Higher-skilled workers tend to be employed in better jobs, but many accept poor-quality matches in order to exit unemployment more quickly. This leads to lower unemployment rates and increased wage dispersion among higher-skilled workers. In light of these stylized facts, I construct a labor search model to formalize the workers' tradeoff between accepting an imperfect match and continuing to search. The model is solved numerically and calibrated to U.S. labor market. The calibrated model generates match acceptance strategies and employment outcomes that are broadly consistent with the empirical facts.

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  • Jacklyn Buhrmann, 2017. "Good Enough Jobs: Skill Mismatch and Two-Sided Heterogeneity in Frictional Labor Markets," Purdue University Economics Working Papers 1287, Purdue University, Department of Economics.
    • Handle: RePEc:pur:prukra:1287
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    File URL: https://business.purdue.edu/research/Working-papers-series/2017/1287JBuhrmann.pdf
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    Cited by:

    1. Jorge Rodríguez & Fernando Saltiel & Sergio Urzúa, 2022. "Dynamic treatment effects of job training," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 37(2), pages 242-269, March.

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