Job Mismatch and Early Career Success

How does being over- or underqualified at the beginning of a worker's career affect skill acquisition, retention, and promotion? Despite the importance of mismatch for the labor market, self-selection into jobs has made estimating these effects difficult. We overcome endogeneity concerns in the context of the US Air Force, which allocates new enlistees to over 130 different jobs based, in part, on test scores. Using these test scores, we create simulated job assignments based on factors outside of an individual's control: the available slots in upcoming training programs and the quality of other recruits entering at the same time. These factors create quasi-random variation in job assignment and hence how cognitively demanding an individual's job is relative to their own ability. We find that being overqualified for a job causes higher attrition, both during technical training and afterward when individuals are working in their assigned jobs. It also results in more behavioral problems, worse performance evaluations, and lower scores on general knowledge tests about the military taken by all workers. On the other hand, overqualification results in better performance relative to others in the same job: job-specific test scores rise both during technical training and while on the job, and these individuals are more likely to be promoted. Combined, these patterns suggest that overqualified individuals are less motivated, but still outperform others in their same job. Underqualification results in a polar opposite set of findings, suggesting these individuals are motivated to put forth more effort, but still struggle to compete when judged relative to others. Consistent with differential incentives, individuals who are overqualified are in jobs which are less valuable in terms of outside earnings potential, while the reverse is true for those who are underqualified.