%0 Report
        %A Garibaldi, Pietro
%A Gomes, Pedro Maia
%A Sopraseuth, Thepthida
        %T Output Costs of Education and Skill Mismatch
        %D 2020
        %8 2020 Feb
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 12974
        %U https://www.iza.org/publications/dp12974
        %X We propose a simple theory of under- and over-employment. Individuals of high type can perform both skilled and unskilled jobs, but only a fraction of low-type workers can perform skilled jobs. People have different non-pecuniary values over these jobs, akin to a Roy model. We calibrate two versions of the model to match moments of 17 OECD economies, considering separately education and skills mismatch. The cost of mismatch is 3% of output on average but varies between -1% to 9% across countries. The key variable that explains the output cost of mismatch is not the percentage of mismatched workers but their wage relative to well-matched workers. 
        %K education mismatch
%K skill mismatch