Post by Economics & Data ED23 GmbH

Our new research paper, "Determinants and Wage Penalty of Skills Mismatch: Cross-Country Evidence from ETF Partner Countries," is now published in the IZA Discussion Paper Series (No. 18609). Drawing on data about skills mismatch from national labour force surveys, our team used this information to take a more thorough look at overeducation and people working outside their field in developing economies. The authors, Dr. Chiara Kofol, Ben Kriechel, Melnyk Maryna, and Tim Vetter (all Economics & Data ED23 GmbH), together with Mircea Badescu (European Training Foundation), explore how mismatches in education and working outside one's field intersect and affect workers and economies. Using data from Labour Force Surveys in Serbia, Albania, Türkiye, Georgia, Armenia, Egypt, and Palestine, we employed clear measures to assess the causes of these mismatches and their effects on wages. Skills mismatches drain valuable human potential and slow progress in our job markets. By revealing how these mismatches interact, our research offers policymakers new tools to design education and employment programs that promote opportunity and lasting growth in developing regions. The main drivers of skills mismatch are socio-demographic factors such as age, gender, and education level, job characteristics like firm size and contract type, and geographic location. Younger workers, particularly those newly entering the job market, are at increased risk of both vertical and horizontal mismatches. Vertical mismatch, or being overeducated for a job, results in an average wage penalty of 7.8%, consistent with patterns observed in existing research. Horizontal mismatch, defined as working outside one's main field of study, is associated with a 7.5% wage premium. This is largely due to workers moving from lower-paid to higher-paid fields. Experiencing both overeducation and horizontal mismatch together produces a small net wage premium of about 1%. However, the effect varies widely across countries due to differences in their labour markets. Read the full paper here: https://lnkd.in/dVKR5rTR #ResearchPublication #LabourEconomics #SkillsMismatch #DevelopingEconomies #PublicPolicy #IZA #ETF #HumanCapital #WagePenalty