This paper examines educational mismatch in Chile, a stable developing economy in Latin America, through the lens of incomplete markets. I offer three significant contributions to the field. Firstly, I develop a theoretical framework rooted in the job competition model and incomplete markets theory, placing educational mismatch in a historical context. This perspective broadens the discourse beyond conventional economic and sociological viewpoints, considering factors like the timing of higher education. Secondly, I explore the connection between educational mismatch's impact on wages and labor market discrimination, particularly gender-based disparities. This sheds light on how female workers are affected by educational mismatch. Lastly, I address methodological concerns by utilizing longitudinal data to refine our analysis, responding to critiques about using cross-sectional data to estimate educational mismatch. This study enhances the understanding of educational mismatch, offering insights specific to Chile's developing economy and contributing to a more comprehensive view of this issue in emerging economies.

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