Differences in horizontal and vertical mismatches across countries and fields of study

• Author: Dieter VERHAEST,Sana SELLAMI,Rolf van der VELDEN
• Published date: 01 March 2017
• DOI: http://doi.org/10.1111/j.1564-913X.2015.00031.x
• Date: 01 March 2017

International Labour Review, Vol. 156 (2017), No. 1

Copyright © The authors 2017

Journal compilation © International Labour Organization 2017

* KU Leuven and Ghent University, email: dieter.verhaest@kuleuven.be. ** KU Leuven

and Antwerp University, email: sana.sellami@kuleuven.be. *** Maastricht University, email:

r.vandervelden@maastrichtuniversity.nl. The authors wish to thank Piet Coppieters, Heidi Knip-

prath, Karel Neels, Walter Nonneman, Walter Van Trier, Mark Visser and participants in the 2012

Workshop of the European Network on Transitions in Youth and the 2013 “Dag van de Sociologie”,

held in Nijmegen, for their useful comments and suggestions on previous versions of this article.

This research was funded by the Flemish Government within the framework of the Policy Research

Centre for Study and School Careers.

Responsibility for opinions expressed in signed articles rests solely with their authors, and

publication does not constitute an endorsement by the ILO.

Differences in horizontal and vertical

mismatches across countries

and elds of study

Dieter VERHAEST,* Sana SELLAMI** and Rolf van der VELDEN***

Abstract. Based on early career data on graduates in Europe and Japan, the

authors investigate whether full job mismatch (i.e. eld-of-study mismatch and

over-education), mere horizontal mismatch and mere vertical mismatch can be

explained by differences in institutions and labour market imbalances. Mere hori-

zontal mismatch is lower in countries with stronger employment protection, higher

unemployment benets and selective educational programmes. Cross-country dif-

ferences in mere vertical mismatch are largely explained by labour market im-

balances. These variables also affect full mismatch, which is positively related to

collective bargaining coverage as well. Field-of-study differences in mismatches

are similarly determined by educational programme characteristics and labour

market imbalances.

The (mis)match between education and work has been the focus of con-

siderable research, concentrating primarily on vertical mismatch or

over-education (Groot and Maassen van den Brink, 200 0; McGuinness, 2006).

Recently, however, more interest has been shown in so-called horizontal mis-

match as well – that is, mismatch between a worker’s eld of study and the

content of his/her job (Wolbers, 2003; Robst, 2007). The bulk of the existing lit-

erature focuses on the effects of mismatch, typically nding that mismatches

are harmful in terms of wages and worker well-being (Hartog, 2000; Allen and

van der Velden, 2001). There is also substantial evidence that the incidence

International Labour Review2

of mismatch varies widely, not only across individuals, but also across labour

market segments by eld of study and across countries.

At the micro level, research indicates that a variety of factors are re-

sponsible for these inequalities, including lower-quality human capital, job

search constraints and discrimination (McGuinness, 200 6). At more aggregated

levels, a frequently suggested cause is imbalance between demand and supply. At

the macro level, the massive expansion of higher education that has occurred

in many countries is often held responsible; at the meso level, the higher inci-

dence of mismatch among workers with a humanities degree than among those

with technical degrees suggests that students fail to choose elds of study that

are in demand because of technological developments. However, whether such

imbalances can truly explain the variability of mismatch at more aggregate

levels largely remains to be investigated.

A small but growing body of research has begun to address this question

through cross-country comparisons of the incidence of over-education. In an

early contribution, Groot and Maassen van den Brink (2000) rely on meta-

analysis to explain over-education at the macro level. They nd that its inci-

dence is positively related to the growth of the labour force. Another study, by

Di Pietro (2002), uses data from a panel of European countries to show that

differences in over-education across countries are related to the educational

composition of the labour force, the strictness of employment protection le-

gislation (EPL) and the level of R&D investment.

More recently, Verhaest and van der Velden (2013) investigated country

and eld-of-study differences in over-education among European graduates.

Their results show that demand and supply conditions within the labour mar-

ket as well as the institutional setting matter. First, they nd evidence regard-

ing the impact of structural imbalances between the demand for and supply

of educated workers on the incidence of graduate over-education in a country.

The supply of educated workers is not found to be important in itself, indicat-

ing that supply may create “its own demand”. Further, business cycle condi-

tions at the time of labour market entry also contribute to explaining graduate

over-education. With respect to educational institutions, Verhaest and van der

Velden show that not only the orientation of the study programme (general

versus specialized) but also its quality and selectivity are important in explain-

ing country and eld-of-study differences in over-education. Finally, with re-

spect to labour market institutions, their research nds no evidence that EPL

inuences over-education. Similar conclusions regarding the role of structural

imbalances, the business cycle and EPL are set forth by Croce and Ghignoni

(2012), who rely on data for the full labour force. Finally, Davia, McGuinness

and O’Connell’s (2010) analysis conrms the aforementioned conclusions re-

garding structural imbalances in the quantity of skilled labour and the select-

ivity of the educational system. In addition, they nd over-education to be

more prevalent among countries with low union density.

In this article, we build on the existing literature by investigating the de-

terminants of differences in mismatch across countries and elds of study ve