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Immigration status and skill mismatch in the UK labour market

Author

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  • Dey, Subhasish

    (University of Warwick)

  • Kapoor, Mahima

    (University of Warwick)

  • Mukherjee, Anirban

    (University of Calcutta)

Abstract

In this paper, we examine if in the UK labour market, for a given job, immigrants are more educated than the natives. The answer to this question has critical policy implications as such skill mismatch signals misallocation of resources. Our theoretical framework explains why we might observe such a mismatch in a full information setup. In our framework, both hard skills (captured by years of education) and soft skills (based on local culture) are critical for productive activities. We further assume that natives have a comparative advantage in soft skills, while immigrants have a comparative advantage in hard skills. Therefore, in equilibrium, immigrants over-invest in hard skills, making them overeducated for a job. Moreover, between first and second-generation immigrants, the degree of overeducation is higher among the first-generation immigrants. We test our theoretical results using a nationally representative survey data from the UK and find support for our theoretical predictions.

Suggested Citation

  • Dey, Subhasish & Kapoor, Mahima & Mukherjee, Anirban, 2025. "Immigration status and skill mismatch in the UK labour market," The Warwick Economics Research Paper Series (TWERPS) 1576, University of Warwick, Department of Economics.
    • Handle: RePEc:wrk:warwec:1576
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    File URL: https://warwick.ac.uk/fac/soc/economics/research/workingpapers/2025/twerp_1576-_dey.pdf
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    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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