Employment and skill mismatch among youth in Lebanon

Purpose - Employment and skill mismatch among youth constitute a major obstacle for access to the job market in the Middle East and North African region. The purpose of this paper is to explore factors explaining employment and the perception of the skill-mismatch problem among the youth in Lebanon using a novel data set covering young people aged from 15 to 29. The paper provides a set of empirical insights that help in the design of public policy targeting school-to-work transition. Design/methodology/approach - The authors control for a rich set of youth and household characteristics to jointly estimate the probability of being employed and the likelihood of reporting a skill-mismatch problem. The empirical analysis uses a bivariate probit model where the first equation estimates the employment status while the second estimates the determinants of skill-mismatch perceptions. The bivariate probit model considers the error terms in both equations to be correlated and the model tests for such a correlation. The authors estimate the model recursively by controlling for the employment dummy variable in the skill-mismatch equation since employed youth could be more or less likely to perceive the skill mismatch. The estimation is conducted first over the whole sample of youth, and then it is implemented by gender and region. Findings - The authors find that youth employment is mainly correlated with age, being male, being single, having received vocational training and financial support from parents, living with parents and receiving current education. The skill-mismatch perceptions are mainly driven by being male, being single, having received post-secondary education and belonging to upper and middle social classes. The authors also find that employability level and skill-mismatch problems are jointly determined in the labor market for males and in the core region only. Originality/value - The paper covers a country that is neglected in the literature on the employment-skill mismatch nexus in the context of school-to-work transition. The study also uses a novel data set focusing on youth. The paper contributes to our understanding of the school-to-work transition in particular and to the youth-to-adulthood transition in general.