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Employment Mismatches Drive Expectational Earnings Errors among Mozambican Graduates

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  • Sam Jones
  • Ricardo Santos
  • Gimelgo Xirinda

Abstract

Biased beliefs about future labor-market earnings are commonplace. Based on a longitudinal survey of graduate work transitions in Mozambique, this study assesses the contribution of employment mismatches to a large positive gap between expected (ex ante) and realized (ex post) earnings. Accounting for the simultaneous determination of pecuniary and non-pecuniary work characteristics, employment mismatches are found to be material and associated with large earnings penalties. A decomposition of these expectational errors shows that around two-thirds are attributable to employment mismatches, suggesting job seekers systematically overestimate the ease of securing “good jobs.”

Suggested Citation

  • Sam Jones & Ricardo Santos & Gimelgo Xirinda, 2024. "Employment Mismatches Drive Expectational Earnings Errors among Mozambican Graduates," The World Bank Economic Review, World Bank, vol. 38(1), pages 51-73.
    • Handle: RePEc:oup:wbecrv:v:38:y:2024:i:1:p:51-73.
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    References listed on IDEAS

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