Academic Literature

Around 40% of workers are mismatched by field, trained in a particular field, works in another field, research finds

Field-of-study mismatch occurs when a worker, trained in a particular field, works in another field. This study draws on the Survey of Adult Skills (PIAAC) to explore how skill supply and labour market demand dynamics influence mismatch. It updates cross-national estimates on mismatch and estimates the mismatch wage penalty. Findings suggest that around 40% of workers are mismatched by field at their qualification level, 11% overqualified in their field and 13% overqualified and working outside their field. The saturation of the field in the labour market and the transferability of the fields’ skills predict the incidence of field-of-study mismatch and overqualification. Workers who are mismatched by field only suffer a wage penalty if they are overqualified.

All countries experience some level of field-of-study mismatch, with the highest levels observed in Korea, England/N. Ireland (UK) and Italy—at around 50% of workers—and the lowest in Austria, Germany and Finland—at less than 30%. Some level of mismatch is expected as individuals look for a job that fits their skills and interests and as economies shift in the types and levels of skill in demand in the labour market. Mismatch is also expected as workers age and career decisions depend more on their past experience than on their formal education. Using data from PIAAC, it is difficult to estimate what proportion of this mismatch is temporary or to what extent mismatch is a transitory stage in workers’ careers. Future studies should explore the magnitude and transience of field-of-study mismatch, as well as the long-term consequences for individual workers who enter their careers in a mismatched job, especially if that mismatched job entailed overqualification. Importantly, however, results from this study suggest that field-of-study mismatch need not be considered negative per se, as workers who find a job at their correct qualification level but in another field do not experience a statistically significant wage penalty in most countries.

Field-of-study mismatch is responsive to the broader labour market context; it is not an individual outcome or one that results uniquely from workers’ choice. Field saturation is predictive of a higher likelihood of individual field-of-study mismatch. The demand for skills in the labour market is one of the drivers of mismatch: when there are more graduates from a particular field than jobs available in that field, some necessarily need to look elsewhere for a job. Some of these workers may find work in another field for which they are overqualified; others will be adequately matched by their qualifications. The costs of mismatch can be reduced if graduates from saturated fields need not downgrade to jobs with lower qualification requirements or if skill anticipation systems are in place to reduce the likelihood that any given field is highly saturated in the future. Training programmes that recognise skills developed in another field can allow workers from saturated fields to apply their skills to other fields without having to undergo complete training programmes again.

The supply of skills, through the characteristics of the training received, and the labour market’s ability to recognise skills from different fields can also drive field-of-study mismatch. Fields-of-study that provide more transferrable skills offer their graduates more opportunities to find work in other fields and increase the likelihood that in the event of field-of-study mismatch, workers can find jobs at the adequate qualification level, thus reducing the costs associated with field-of-study mismatch. However, the transferability of skills is not equally predictive of field-of-study mismatch across all countries, pointing to the articulation of education systems and curricula and the extent to which a particular field provides the same set of general skills across all countries and how credentials are used as signals of worker skills. Such variability is also consistent with the relationship between each field’s skill transferability levels and the field-of-study mismatch penalty. This signals that the relationship between skill transferability and wages varies greatly by country, possibly because of the degree to which employers rely on field-of-study as a measure of worker skills or because of the degree of transferability of skills of each field across countries (training for a particular field may be more field-specific in one country than another, and/or employers may be more willing and able to recognise skills obtained in another field).

The fact that in most countries, there is no significant wage penalty associated with field-of-study mismatch when workers are not overqualified (Table 2) and that overqualification accounts for only a part of the total field-of-study mismatch (Table 1) suggests that training is already producing sufficient skills to allow at least some, but not all, workers to move across fields at the same qualification level. Investing in retraining or providing alternative career paths so that mismatched workers can earn a credential in a new field at their same qualification level may help the labour market prospects of mismatched workers who are forced to downgrade and also reduce the risks associated to field-of-study mismatch which appear when workers have to downgrade. Encouraging the development of more general skills in training so that workers who are not able to find work in their field-of-study do not have to downgrade to find work may be advisable as is the determination of vacancies in educational programmes in accordance to the current or expected labour market demand. Moreover, encouraging the development of a qualification framework that takes into account workers’ flexibility may help employers recognise workers’ skills and thus recognise that, for many occupations, a perfect match between field-of-study and occupation is not a requirement for sufficient performance in the job which in turn will allow for graduates from saturated fields to find jobs at their qualification levels in other fields.

Consistent with previous studies, in PIAAC, mismatched individuals experience a wage penalty. It is largely driven by overqualification. Field-of-study mismatch implies, at most and in only a handful of countries, a small penalty for workers, but it is large if workers are forced to take a job that is below their qualification level. Overqualification in or outside the field points to lost productivity related to a lack of job-specific skills (models control for skill heterogeneity) and can aggregate to important national level costs.

Field-of-study mismatch, though not as problematic when it does not entail overqualification, should be addressed at the policy level because of the consequences it brings to individuals who downgrade and become overqualified. Considering that the bulk of the wage penalty that results from field-of-study mismatch comes from workers’ downgrading, facilitating the transferability of workers and skills across fields without having to downgrade (by recognising their skills through comprehensive qualification frameworks or by offering workers and graduates the opportunity to re-skill in a different field while recognising their highest qualification) may help reduce the costs of field-of-study mismatch.

Chosen excerpts by Job Market Monitor. Read the whole story at Field-of-study mismatch and overqualification: labour market correlates and their wage penalty | IZA Journal of Labor Economics | Full Text

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