IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp18609.html

Determinants and Wage Penalty of Skills Mismatch: Cross-Country Evidence from ETF Partner Countries

Author

Listed:
  • Kofol, Chiara

    (Economics & Data ED23 GmbH)

  • Kriechel, Ben

    (Economics & Data ED23 GmbH)

  • Melnyk, Maryna

    (Economics & Data ED23 GmbH)

  • Vetter, Tim

    (Economics & Data ED23 GmbH)

  • Badescu, Mircea

    (European Training Foundation (ETF))

Abstract

The current literature finds that many employees in low and middle-income countries are over-qualified for their jobs or are employed in an occupation that is unrelated to their principal field of study. Vertical and horizontal mismatches signal that workers cannot fully utilise their skills, implying a potential loss of human capital. However, the current literature scarcely explores the determinants and wage penalties of horizontal and vertical skills mismatches comparably across countries, as well as their co-occurrence. We analyse the determinants of vertical and horizontal skills mismatch between 2016 and 2019 using the Labour Force Survey (LFS) of Serbia, Albania, Türkiye, Georgia, Armenia, Egypt, and Palestine. Consistent with the existing literature, the findings show that socio-demographic, job-related, and geographic characteristics determine vertical and horizontal mismatches, as well as their combined occurrence. The results also show that overeducation imposes a wage penalty, that horizontal mismatch is associated with a wage premium of approximately 7.5%, and that the combination of overeducation and horizontal mismatch yields a small positive net effect of approximately 1%.

Suggested Citation

  • Kofol, Chiara & Kriechel, Ben & Melnyk, Maryna & Vetter, Tim & Badescu, Mircea, 2026. "Determinants and Wage Penalty of Skills Mismatch: Cross-Country Evidence from ETF Partner Countries," IZA Discussion Papers 18609, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp18609
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp18609.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Rolf van der Velden & Mark Levels & Jim Allen, 2014. "Educational mismatches and skills: New empirical tests of old hypotheses," Investigaciones de Economía de la Educación volume 9, in: Adela García Aracil & Isabel Neira Gómez (ed.), Investigaciones de Economía de la Educación 9, edition 1, volume 9, chapter 34, pages 655-680, Asociación de Economía de la Educación.
    2. Kiker, B. F. & Santos, Maria C. & de Oliveira, M. Mendes, 1997. "Overeducation and undereducation: Evidence for Portugal," Economics of Education Review, Elsevier, vol. 16(2), pages 111-125, April.
    3. Raúl Ramos & Esteban Sanromá, 2013. "Overeducation and Local Labour Markets in Spain," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 104(3), pages 278-291, July.
    4. Booth, Alison L. & Bryan, Mark L., 2002. "Who Pays for General Training? New Evidence for British Men and Women," IZA Discussion Papers 486, IZA Network @ LISER.
    5. Francesco Berlingieri, 2019. "Local labor market size and qualification mismatch," Journal of Economic Geography, Oxford University Press, vol. 19(6), pages 1261-1286.
    6. Kelly, Elish & O'Connell, Philip J. & Smyth, Emer, 2010. "The economic returns to field of study and competencies among higher education graduates in Ireland," Economics of Education Review, Elsevier, vol. 29(4), pages 650-657, August.
    7. Gary S. Becker, 1962. "Investment in Human Capital: A Theoretical Analysis," Journal of Political Economy, University of Chicago Press, vol. 70(5), pages 1-9.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Igna, Ioana A., 2018. "The effects of educational mismatch on inventor productivity. Evidence from Sweden, 2003-2010," Papers in Innovation Studies 2018/8, Lund University, CIRCLE - Centre for Innovation Research.
    2. Signe Jauhiainen, 2006. "Regional Differences in Overeducation," ERSA conference papers ersa06p180, European Regional Science Association.
    3. Giuseppe Croce & Emanuela Ghignoni, 2011. "Overeducation and spatial flexibility in Italian local labour markets," Working Papers in Public Economics 145, Department of Economics and Law, Sapienza University of Rome.
    4. Sandra Nieto & Raúl Ramos, 2013. "Non-Formal Education, Overeducation And Wages," Revista de Economia Aplicada, Universidad de Zaragoza, Departamento de Estructura Economica y Economia Publica, vol. 21(1), pages 5-28, Spring.
    5. Guillermo Montt, 2017. "Field-of-study mismatch and overqualification: labour market correlates and their wage penalty," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 6(1), pages 1-20, December.
    6. Filipe Almeida-Santos & Karen Mumford, 2006. "Employee Training, Wage Dispersion and Equality in Britain," Discussion Papers 06/14, Department of Economics, University of York.
    7. Panos, Sousounis, 2009. "The Impact of Work-Related Training on Employee Earnings: Evidence from Great Britain," MPRA Paper 14262, University Library of Munich, Germany.
    8. Jorge Calero & Josep-Oriol Escardíbul, 2014. "Barriers to non-formal professional training in Spain in periods of economic growth and crisis. An analysis with special attention to the effect of the previous human capital of workers," Working Papers 2014/12, Institut d'Economia de Barcelona (IEB).
    9. Škrinjarić Bruno, 2023. "Competence Proximity to Employers’ Requirements and Labour Market Success of Economics and Business Graduates," South East European Journal of Economics and Business, Sciendo, vol. 18(2), pages 140-161, December.
    10. Banantika Datta & Udaya S. Mishra, 2019. "Effect of Education–Occupation Mismatch on Wages in India," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 62(3), pages 389-411, September.
    11. Paula Herrera-Idárraga & Enrique L�pez-Bazo & Elisabet Motell�n, 2013. "Informality and Overeducation in the Labor Market of a Developing Country," Vniversitas Económica, Universidad Javeriana - Bogotá, vol. 0(0), pages 1-36.
    12. Humburg, Martin & van der Velden, Rolf, 2015. "Skills and the graduate recruitment process: Evidence from two discrete choice experiments," Economics of Education Review, Elsevier, vol. 49(C), pages 24-41.
    13. repec:kap:iaecre:v:11:y:2005:i:1:p:93-109 is not listed on IDEAS
    14. Kracke, Nancy & Reichelt, Malte & Vicari, Basha, 2017. "Wage losses due to overqualification: The role of formal degrees and occupational skills," IAB-Discussion Paper 201710, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    15. Lourdes Badillo-Amador & Antonio García-Sánchez & Luis Vila, 2005. "Mismatches in the Spanish Labor Market: Education vs. Competence Match," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 11(1), pages 93-109, February.
    16. Giorgio Brunello & Maria De Paola, 2004. "Market Failures and the Under-Provision of Training," CESifo Working Paper Series 1286, CESifo.
    17. Tommaso Aquilante & Luca Livio & Tom Potoms, 2020. "On-the-job training and intra-family dynamics," Bank of England working papers 873, Bank of England.
    18. Zineb Draissi & Yu Rong, 2023. "Estimating the Determinants and Extent of Morocco’s Education and Skill Mismatch Through the STEP Survey," SAGE Open, , vol. 13(2), pages 21582440231, June.
    19. Daria Luchinskaya & Peter Dickinson, 2019. "‘Virtuous’ and ‘Vicious’ Circles? Adults’ Participation in Different Types of Training in the UK and Its Association with Wages," Social Inclusion, Cogitatio Press, vol. 7(3), pages 177-201.
    20. Filipe Almeida‐Santos & Karen Mumford, 2005. "Employee Training And Wage Compression In Britain," Manchester School, University of Manchester, vol. 73(3), pages 321-342, June.
    21. Nancy Kracke & Malte Reichelt & Basha Vicari, 2018. "Wage Losses Due to Overqualification: The Role of Formal Degrees and Occupational Skills," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 139(3), pages 1085-1108, October.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp18609. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Mark Fallak (email available below). General contact details of provider: https://edirc.repec.org/data/izaaalu.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.