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Measuring Labour Mismatch in Europe

Morgado, A., T.N. Sequeira, M. Santos, A. Ferreira-Lopes, A.B. Reis (2014), Measuring Labour Mismatch in Europe, CEFAGE-UE Working Paper 2014/13.

We calculate aggregate measures of mismatch in the labour market for 30 European countries. These indicators measure vertical mismatch (related to the level of education, e.g. overeducation, and undereducation) and horizontal mismatch (related to the eld of education) and are comparable across countries and through time. We obtain that in European countries between 15% to nearly 35% of workers have a job for which they have more (or less) qualications than the usual level. Approximately 20% to nearly 50% work in a job for which they do not have the usual eld qualication. There is a great variability on mismatch incidence across European labour markets. Undereducation affects more workers than overeducation in most European countries. Low correlations between mismatch and unemployment indicate that mismatch should be regarded as an additional informative variable, useful to characterize labour markets. We also study the in uence of the different measures of mismatch on the evolution of per capita output in both the short and long-run. We nd evidence of strong short-run effects of mismatch.

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Keywords: Education; Human Capital; Mismatch; Labour Market.