Abstract

This paper proposes a new measure of skill mismatch to be applied to the recent OECD Survey of Adult Skills (PIAAC). The measure is derived from a formal theory and combines information about skill proficiency, self-reported mismatch and skill use. The theoretical foundations underling this measure allow identifying minimum and maximum skill requirements for each occupation and to classify workers into three groups: the well-matched, the under-skilled and the over-skilled. The availability of skill use data further permits the computation of the degree of under- and over-usage of skills in the economy. The empirical analysis is carried out using the first round of the PIAAC data, allowing comparisons across skill domains, labour market statuses and countries.

Highlights

  • A large number of studies investigate the nature and consequences of mismatch, generally defined as some sort of discrepancy between the characteristics of employed workers and the requirements of the jobs that they occupy (Quintini 2011a)

  • We develop a general procedure to construct standard errors for estimates of skill-mismatch derived from surveys like PIAAC, where the sampling frames can differ substantially across countries and where the test scores are derived from imputation models

  • The overlap between literacy and numeracy mismatch is substantial: 90% of the workers who are well-matched in literacy are well-matched in numeracy

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Summary

Introduction

A large number of studies investigate the nature and consequences of mismatch, generally defined as some sort of discrepancy between the characteristics of employed workers and the requirements of the jobs that they occupy (Quintini 2011a). In the simple theory spelled out jobs are characterized by three parameters: the operational costs (kj), the returns to deployed skills (βj) and the maximum skill level (maxj).11 in order to become well-matched, any mismatched worker needs to move to a job with a different combination of these three parameters.

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