OECD Economics Department Working Papers

ISSN: 
1815-1973 (online)
http://dx.doi.org/10.1787/18151973
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Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.

The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.

 

Labour Market Mismatch and Labour Productivity

Evidence from PIAAC Data You or your institution have access to this content

English
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Author(s):
Muge Adalet McGowan1, Dan Andrews1
Author Affiliations
  • 1: OECD, France

28 Apr 2015
Bibliographic information
No.:
1209
Pages:
50
http://dx.doi.org/10.1787/5js1pzx1r2kb-en

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This paper explores the link between skill and qualification mismatch and labour productivity using cross-country industry data for 19 OECD countries. Utilising mismatch indicators aggregated from micro-data sourced from the recent OECD Survey of Adult Skills (PIAAC), the main results suggest that higher skill and qualification mismatch is associated with lower labour productivity, with over-skilling and under-qualification accounting for most of these impacts. A novel result is that higher skill mismatch is associated with lower labour productivity through a less efficient allocation of resources, presumably because when the share of over-skilled workers is higher, more productive firms find it more difficult to attract skilled labour and gain market shares at the expense of less productive firms. At the same time, a higher share of under-qualified workers is associated with both lower allocative efficiency and within-firm productivity – i.e. a lower ratio of high productivity to low productivity firms. While differences in managerial quality can potentially account for the relationship between mismatch and within-firm productivity, the paper offers some preliminary insights into the policy factors that might explain the link between skill mismatch and resource allocation.
Keywords:
education, qualification mismatch, allocation of talent, reallocation, productivity, managerial quality, human capital
JEL Classification:
  • I20: Health, Education, and Welfare / Education and Research Institutions / General
  • J20: Labor and Demographic Economics / Demand and Supply of Labor / General
  • J24: Labor and Demographic Economics / Demand and Supply of Labor / Human Capital ; Skills ; Occupational Choice ; Labor Productivity
  • O40: Economic Development, Innovation, Technological Change, and Growth / Economic Growth and Aggregate Productivity / General
 
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