Education-based and skill-based measures of mismatch: An empirical assessment

By examining the determinants of different measures of mismatch for a sample of Italian younger university graduates, this paper provides additional evidence on the ena-bling factors and the obstacles to early matching in the labour market. After calculating different education-based and skill-based indexes of alignment between required and provided skills, the paper explores the determinants of matching conditions. The pro-posed empirical analysis takes advantage of the Italian section of REFLEX, a dataset providing rich information on the education and the early careers of a sample of 1999-2000 young university graduates from 13 European countries and Japan. The results of the empirical analysis confirm the distinct information contents provided by measures of educational mismatch and skill mismatch and their differentiated impact on the earnings of university graduates. The analysis of the determinants of mismatch shows that the aggregate categories of overeducation and undereducation mask differentiated combinations of educational and skill mismatch, often affected by distinct drivers. Those findings involve significant consequences for public policy aimed at mitigating mismatch in the labour market and, above all, its negative consequences for employers and employees. Attention should focus on segmented, multi-dimensional measures rather than on aggregate measures of overeducation, undereducation and matching.