Labour Market Mismatch Research Articles

Is Labor Market Mismatch a Big Deal in Japan?

Despite its low unemployment rate, the recent shift in the Japanese Beveridge curve indicates increased labor mismatch. This paper quantifies the age, employment-type (full or part-time), and occupational mismatch in the Japanese labor market following Sahin and others (2013). Between April 2000 and April 2013, the age mismatch has steadily declined while the occupational and employmenttype mismatch has shown a countercyclical pattern, showing a sharp increase during the global financial crisis. Occupational mismatch accounted for approximtely 20-40 percent of the recent rise in the unemployment rate in Japan. The magnitude was comparable to that of the U.K. and the U.S.

Is Labor Market Mismatch a Big Deal in Japan?

Is Labor Market Mismatch a Big Deal in Japan?

Immigrant over- and under-education: the role of home country labour market experience

Abstract Literature on the immigrant labour market mismatch has not explored the signal provided by the quality of home country work experience, particularly that of education-occupation mismatch prior to migration. We show that type of work experience in the home country plays a significant role in explaining immigrant mismatch in the destination country’s labour market. We use the Longitudinal Survey of Immigrants to Australia and find that having been over-educated in the last job held in the home country increases the likelihood of being over-educated in Australia by about 45 percent. Whereas having been under-educated in the home country has an even stronger impact, as it increases the probability to be similarly mismatched in Australia by 62 percent.

A Search and Matching Approach to Labor Markets: Did the Natural Rate of Unemployment Rise?

The U.S. unemployment rate has remained stubbornly high since the 2007–2009 recession, leading some observers to conclude that structural rather than cyclical factors are to blame. Relying on a standard job search and matching framework and empirical evidence from a wide array of labor market indicators, we examine whether the natural rate of unemployment has increased since the recession began, and if so, whether the underlying causes are transitory or persistent. Our preferred estimate indicates an increase in the natural rate of unemployment of about one percentage point during the recession and its immediate aftermath, putting the current natural rate at around 6 percent. An assessment of the underlying factors responsible for this increase, including labor market mismatch, extended unemployment benefits, and uncertainty about overall economic conditions, implies that only a small fraction is likely to be persistent.

The Role of Welfare Systems in Affecting Out-Migration: The Case of Central and Eastern Europe

This paper analyses the role of welfare systems in shaping migration patterns in Central and Eastern Europe over the transition process and after EU accession. It argues that states have played a crucial role in affecting migration by creating and widening opportunities for potential and actual migrants through welfare system policies. This explains why CEE countries where social spending figures have been lower, unemployment benefit schemes less extensive, and where labour market mismatches remained unaddressed, experienced greater out-migration. Investigating the role of sending states’ institutions in a comparative framework and over time, this paper analyses migration as part of broader social and economic processes and contributes to our understanding of how sending countries’ institutional factors affect out-migration.

A Rising Natural Rate of Unemployment: Transitory or Permanent?

The U.S. unemployment rate has remained stubbornly high since the 2007-2009 recession leading many to conclude that structural, rather than cyclical, factors are to blame. Relying on a standard job search and matching framework and empirical evidence from a wide array of labor market indicators, we examine whether the natural rate of unemployment has increased since the recession began, and if so, whether the underlying causes are transitory or persistent. Our analyses suggest that the natural rate has risen over the past several years, with our preferred estimate implying an increase from its pre-recession level of close to a percentage point. An assessment of the underlying factors responsible for this increase, including labor market mismatch, extended unemployment benefits, and uncertainty about overall economic conditions, implies that only a small fraction of this increase is likely to be persistent.

A Rising Natural Rate of Unemployment: Transitory or Permanent?

ABSTRACT The U.S. unemployment rate has remained stubbornly high since the 2007-2009 recession leading many to conclude that structural, rather than cyclical, factors are to blame. Relying on a standard job search and matching framework and empirical evidence from a wide array of labor market indicators, we examine whether the natural rate of unemployment has increased since the recession began, and if so, whether the underlying causes are transitory or persistent. Our analyses suggest that the natural rate has risen over the past several years, with our preferred estimate implying an increase from its pre-recession level of close to a percentage point. An assessment of the underlying factors responsible for this increase, including labor market mismatch, extended unemployment benefits, and uncertainty about overall economic conditions, implies that only a small fraction of this increase is likely to be persistent. Keywords: equilibrium unemployment, Beveridge curve, structural unemployment, mismatch JEL codes: E24, J3, J6. *Corresponding author (email: mary.daly@sf.frb.org). Daly, Hobijn, and Valletta are at the Federal Reserve Bank of San Francisco; Sahin is with the Federal Reserve Bank of New York. The authors are grateful to Glenn Rudebusch and John Williams for their suggestions and comments. The views expressed in this paper are solely those of the authors and are not attributable to the Federal Reserve Banks of New York and San Francisco or the Federal Reserve System. This version covers data through August 20

Labour market mismatch among UK graduates: An analysis using REFLEX data

There is much disagreement in the literature over the extent to which graduates are mismatched in the labour market and the reasons for this. In this paper we utilise the Flexible Professional in the Knowledge Society (REFLEX) data set to cast light on these issues, based on data for UK graduates. We find substantial pay penalties for overeducation for both sexes and for overskilling in the case of men only. When both education and skill mismatch variables are included together in the model only overskilling reduces job satisfaction consistently for both sexes. Using job attributes data it appears that the lower wages of the overqualified may in part simply represent a compensating wage differential for positive job attributes, while for men at least there are real costs to being overskilled.

JOB CENTERS: ARE FINDERS KEEPERS? A NOTE FROM JAPAN

Do job centers help unemployed people to find and keep jobs? Using the results of a unique survey by the Japanese government, this note examines the employment success of job center clients. Success in finding and keeping jobs varies systematically across distinct subgroups. Moreover, job center clients were not particularly successful in finding work that fit their qualifications. (JEL J60, J68, J40)

Foreign Diploma Versus Immigrant Background

This article compares the labour market situation of graduates with different types of international background. The authors look at four groups of graduates: immigrants and ethnic Norwegians graduated in Norway and immigrants and ethnic Norwegians graduated abroad. By employing multinomial logistic regression analyses the authors find that ethnic Norwegians educated abroad face a higher risk of labour market mismatch in terms of unemployment and overqualification than Norwegians graduated domestically. Non-Western immigrants had an even higher risk of unemployment and skills mismatch, regardless of the origin of their education. The results indicate that education from abroad is not fully transferable to a domestic labour market and, in addition, that forms of discrimination against non-Western immigrants exist.

Labour Market Mismatch Among UK Graduates: An Analysis Using Reflex Data

There is much disagreement in the literature over the extent to which graduates are mismatched in the labour market and the reasons for this. In this paper we utilise the Flexible Professional in the Knowledge Society (REFLEX) data set to cast light on these issues, based on data for UK graduates. REFLEX examines the labour market status of graduates five years after graduation and distinguishes between first and current job, vertical and horizontal mismatch, over/underqualification and over/underskilling as well as including a range of questions on the nature of work organisation and individual competences. We find substantial pay penalties for over-education for both sexes and for overskilling in the case of men only. When both education and skill mismatch variables are included together in the model only overskilling reduces job satisfaction consistently for both sexes. Using job attributes data it appears that the lower wages of the overqualified may in part simply represent a compensating wage differential for positive job attributes, while for men at least there are real costs to being overskilled.

Employing the Unemployed: Some Case Study Evidence on the Role and Practice of Employers

Whilst there has been extensive research into the supply-side causal factors of spatial mismatch there is comparatively little commentary or analysis of the demand side. This paper seeks to make a contribution to the literature with particular reference to the human resources practices of employers. A three-stage model of recruitment is used to identify employer practices which we argue can (unwittingly) contribute to labour market mismatch. We conclude that, if recruitment from among the unemployed is to play a part in filling skills shortages, attention needs to be placed not only on the recruitment processes of employers but also on their retention and internal employee development practices.

A tale of two clusters: high technology industries in Cambridge

This paper offers a textured case analysis of biotechnology and ICT clusters in Cambridge (UK). Arguing that this is the superior method by which an understanding of clustering processes may be gained, until econometric methods move beyond their infancy in analysing socio-economic interaction, it is shown that clustering in this university city is pronounced, changing and, in some instances, problematic. The two clusters are embedded in network relationships among a multitude of actors of consequence. These networks are partially exclusive, especially regarding new activities like leisure software/computer games that may be less than core cluster activities. There are diseconomies of agglomeration and labour market mismatches requiring educational provision of a less scientific and more technical nature. The demand for land is insatiable but heavily constrained by zoning regulations. Nevertheless, the clusters show no sign of degrading under these circumstances, rather the opposite of continuing dynamism.

Rational choice under unequal constraints: the example of Belgian higher education

The virtues of laisser faire in the sphere of educational choices appear these days more and more doubtful when one looks at the apparently irrational students preferences for fields in low demand on the job market. In this paper, we try to give empirical content to the thesis advanced by Mingat and Eicher (Mingat, A., Eicher, J.C., 1982. Higher education and employment markets in France, Higher Education 11, 211–220), who suggest that students do not only take expected economic returns into account when choosing a discipline, but also their mere chances of academic success. If one assumes that more remunerative orientations are also riskier, and that poorer students give a heavier weight to the risk-component than richer ones, then one can reconcily economic rationality with labour market mismatches. Using a three-step methodology based on Lee's work (Lee, L.F., 1983. Generalized econometric models with selectivity. Econometrica 51, 507–512), this is precisely what we find. We show that this result has important policy implications, as tending at equalizing opportunities will make poorer students less sensible to the risk component and more concerned with market needs.

Estimating commuting flows for minority ethnic groups in England and Wales

Various studies have pointed to the persistent labour market disadvantage faced by many individuals from minority ethnic groups in Great Britain. Analyses have also shown that minority ethnic groups remain spatially concentrated in particular parts of the urban and regional system, and that they are over-represented in areas of socioeconomic disadvantage. There has been considerable debate about the skills and spatial dimensions to labour market mismatch, and minority ethnic issues have been given particular prominence in the work of the Social Exclusion Unit and Policy Action Teams. However, analysts in Great Britain examining the ethnic minority dimension to the problem of labour market mismatch are hampered by a lack of data, including detailed local information on journey-to-work flows disaggregated by ethnic group. This article is concerned with estimating commuting flows by ethnic group in England and Wales, and using these estimates to examine commuting patterns by ethnic group in 1991 in the context of employment change over the preceding inter-censal period, in order to provide some insights into labour market mismatch.

Endogenous unemployment insurance in a monopoly union model when job search matters

The aim of the paper is to derive an optimal unemployment insurance policy for a utilitarian trade union when job search matters. It is shown that the well-known result from the theory of insurance concerning the optimal risk sharing between risk averse agents changes essentially, if the search behavior is allowed to affect the performance of the labor market. We assume that labor market mismatch decreases with search effort, which in turn decreases with the benefit. The resulting equilibrium benefit is shown to be a decreasing function of the trade union's share of the costs of the insurance fund. The model is also extended to the case where the benefit is made conditional on monitored search effort.

Factors Affecting Employment in the Arabian Gulf Region, 1975–85

Assesses the main factors affecting employment in the Arab Gulf region. In particular: What are the main determinants of employment in the region? How do these determinants vary between national and foreign workforces? Have these determinants changed over time? The results, particularly for the 1980‐85 period, suggest that labour market mismatches may be increasing in the Arab World. This is essentially the problem of too many PhDs and too few mechanics. The symptom of this would be relatively high levels of disguised unemployment among the highly educated, coupled with a shortage of artisans. The damage arising from these skill mismatches lies in the way the various economic sectors are likely to expand while faced by labour constraints. These findings suggest that reforms of both the educational system and the hiring practices of Government agencies will be critical to restoring increases in productivity and ultimately expanded rates of non‐oil income.