Job Mismatch and On‐the‐job Search Behavior Among University Graduates in Malaysia

• Date: 01 December 2017
• Author: Zainizam Zakariya
• Published date: 01 December 2017
• DOI: http://doi.org/10.1111/asej.12135

Job Mismatch and On-the-job Search Behavior

Among University Graduates in Malaysia*

Zainizam Zakariya

Received 25 March 2017; accepted 6 September 2017

This paper examines the incidence and the effects of job mismatch on workers’

job search behavior while working in Malaysia. Using the 2007 Graduate Tracer

Study (GTS-07) dataset, approximately 32 percent of workers were deemed mis-

matched and 52 percent were actively looking for another job. Using a logit

model, the risk of being engaged in on-the-job search activity was higher among

the mismatched workers and the magnitude of the effects was greater for the

severely mismatched than for the moderately mismatched workers. This suggests

that the mismatched workers are heterogeneous. This might be due to different

traits of workers or there may be unobserved heterogeneity that varies from one

mismatched to another mismatched worker.

Keywords: apparently mismatched, genuinely mismatched, moderately mis-

matched, on-the-job search and Malaysia, severely mismatched.

JEL classification codes: J01, J24.

doi: 10.1111/asej.12135

I. Introduction

The expansion of higher education in Malaysia has allowed many more individ-

uals to gain access to higher education and with this has come higher expecta-

tions in the labor market in terms of better jobs and improved salaries. There

has been a significant increase in enrolments at the tertiary level in public higher

education institutions (HEIs), especially since 1995. Between 1985 and 1995,

the total number of students undertaking tertiary degrees increased by more

than 100 percent, from 37 840in 1985 to 75 709, and the enrollment continuously

increased to 530, 156 students (National Education Statistics: Higher Education

Sector, Ministry of Education, 2014).

Unsurprisingly, there has been a dramatic rise in the number of graduates pro-

duced by public HEI, from 62 990 (both diploma and degree qualifications) in

1985 to 273 893 in 2013 (a 4.35-times increase). Consequently, the quality of

the workforce in terms of educational attainment improved tremendously

between 1985 and 2013. While there has been a decline in the share of those

*Zakariya: Department of Economics, Faculty of Management and Economics, Sultan Idris Edu-

cation University, 35900 Tanjung Malim, Ipoh, Malaysia. Email: zainizam@fpe.upsi.edu.my

© 2017 East Asian Economic Association and John Wiley & Sons Australia, Ltd

Asian Economic Journal 2017, Vol.31 No. 4, 355–379 355

employed who possess primary or informal qualifications, the share of those

with secondary and tertiary education has been increasing significantly. By

2014, the percentage of the labor force with a tertiary education had increased

to 47 percent (Department of Statistics, 2015).

Despite these developments, there are a number of outstanding challenges

facing the Malaysian labor market, one of which is the shortage of skilled

workers (World Bank, 2009, 2011). The skills shortage in the labor market

points to a mismatch between the skills provided by Malaysia’s education system

and those demanded by its firms. Some studies in Malaysia have revealed that

one-third of graduates in Malaysia have ended up in jobs that are not commen-

surate with their education background, with many workers being overeducated

(Zulkifly, Ishak, and Abu Hassan, 2010) Being overeducated can lead to lower

job satisfaction (see Peirò et al., 2010) and reduce individuals’productivity as a

result of lower earnings outcomes (e.g. see McGuinness, 2006; Leuven and Oos-

terbeek, 2011; Zakariya, 2012). There is also some evidence of negative exter-

nalities from having mismatched workers in the workplace (Zakariya, 2012).

This would suggest that overeducation may diminish not only individuals’well-

being but also firm performance.

This raises the concern of whether overeducation has any real behavioral

consequences for workers; that is, whether overeducated workers stay at their

current jobs or whether they tend to look elsewhere for employment that corre-

sponds to their educational backg round while they are working. This ‘on-the-job

search’behavior can be described as the cognitive process of thinking, planning

and desiring to leave a cur rent job and looking for another job while still

employed (Mobley, 1977; Weisberg, 1994; Purani and Sahadev, 2007). These

overeducated workers better access to labor market information while still

employed. Previous studies indicate that while still employed, the overeducated

are more likely to look for another job compared with their counterparts who are

well-matched to their jobs in terms of education (Wolbers, 2003; Wald, 2005;

Di Pietro and Urwin, 2006). In addition, the literature suggests that overeducated

workers tend to move into better-matched jobs in their subsequent career

(e.g. Sicherman and Galor, 1991; Hersch, 1995; Groeneveld and Hartog, 2004).

This means that being overeducated is viewed as a temporary phenomenon for

workers. Therefore, examining the career path of overeducated workers is signif-

icant because higher job turnover among better-educated workers can diminish

the effectiveness of organizations. Indeed, a higher turnover increases advertis-

ing, recruitment, selection and hiring expenses (Meier and Hicklin, 2008).

Unfortunately, the studies mentioned above do not consider the plight of the

developing countries. Mehta et al. (2011) note that mismatch could have differ-

ent normative implications if it is found in developing economies where

incomes are low, education levels are rising fast from a low base and the quality

of education is highly variable. The lack of information in the dataset regarding

on-the-job search activity may also explain why the topic of job search behavior

and overeducation remains unexplored among developing countries. Existing

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© 2017 East Asian Economic Association and John Wiley & Sons Australia, Ltd