Educational mismatches versus skill mismatches: Effects on wages, job satisfaction, and on-the-job search

Education-job mismatches are reported to have serious effects on wages and other labour market outcomes. Such results are often cited in support of assignment theory, but can also be explained by institutional and human capital models. To test the assignment explanation, we examine the relation between educational mismatches and skill mismatches. In line with earlier research, educational mismatches affect wages strongly. Contrary to the assumptions of assignment theory, this effect is not explained by skill mismatches. Conversely, skill mismatches are much better predictors of job satisfaction and on-the-job search than are educational mismatches.