Education in transition and job mismatch: Evidence from the skills survey in non-EU transition economies

This paper explores the incidence and determinants of education†job vertical mismatch in four non-EU transition economies, namely Armenia, Georgia, Macedonia and Ukraine. It uses cross†section data from the recent World Bank’s Skills toward Employment and Productivity (STEP) surveys of working-age urban population and applies several methods of measuring the incidence of education†job mismatch. The particular interest is to examine whether the young generation that acquired education in modern economic environment is different from the older generation that studied before or shortly after the onset of transition, and whether overeducated and undereducated workers are different from those who are well-matched in terms of cognitive and non-cognitive skills. Our study shows that although workers from the older pre-transition cohort have relatively higher incidence of overeducation in Georgia and Armenia and lower incidence of overeducation in Ukraine and Macedonia as compared to younger workers from the transition cohort, the effect of cohort and age is rarely significant when other important characteristics are taken into account. Overeducated individuals seem to possess a relatively worse bundle of skills than workers who are adequately matched to their jobs in terms of formal education, undereducated individuals often perform better than well-matched workers, but the differences are not always significant.