Does job mismatch affect wage earnings among business and management graduates in Vietnam?

Abstract

This paper investigates the wage penalty resulting from horizontal job mismatch among wage earners with university degrees in the fields of business and management. The study utilizes pooled cross-sectional data from the Labour Force Surveys (LFS) in 2018, 2019 and 2020 in Vietnam. We employ instrumental variable (IV) estimators to address the potential endogeneity of job mismatch. Estimates from the ordinary least square (OLS) and IV methods show that job mismatch has a negative effect on wage earnings and that the penalty for such mismatches is nearly double for men than for women. Also, for mismatched graduates in the private sector, the wage penalty is nearly triple what it is for those in the public sector. Notably, we find that the wage penalty is substantial for those under 50, but less so for those over 50. This suggests that education-specific skills can be substituted by work experience to some extent.