Master students complete theses

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During the last semester KTH students Eirini Zira and Arthur-Alexandre Mauriès conducted two master theses in Industrial Economics under the supervision of Associate Professor Kristina Nyström. The essays have now been approved and are now part of the Ratio programs Skills for growth.

Master’s degree project: The impact of public policies on skill mismatch: cross-country analysis in OECD economies, Arthur-Alexandre Mauriès (KTH 2016)

Governments aim at reducing skill mismatch because of the adverse effects that it can trigger at the individual and firm level as well as at the country level. Skill mismatch has been defined as a persistent phenomenon with long lasting cross-country differences (Mavromaras et al., 2013). This phenomenon could thus be explained by equivalent cross-country differences in national public policies. The purpose of this thesis is to test the impact of public policies on the probability of being skill mismatched across OECD countries. This thesis explores the recent OECD Survey of Adult Skills from the Programme for the International Assessment of Adult Competencies using an alternative measure of skill mismatch. Data for public policies come from a wide variety of sources. The results show that both policies targeted on firms (‘demand side of skills’) and policies dealing with the available workforce (‘supply side of skills’) can result in a reduction of skill mismatch levels. Regarding the demand side of skills, countries with smooth regulations on the firing of permanent employees, with efficient policies increasing the allocative efficiency and with a strong focus on entrepreneurship seem to experience lower levels of skill mismatch. For the case of the supply side of skills, housing policies efficient at increasing labour mobility together with a higher participation in lifelong learning and higher investments in active labour market programmes and education are expected to be associated with a reduction of skill mismatch.

Master’s degree project: The Impact of Skill Mismatch on Aggregate Productivity: cross-country analysis in OECD economies, Eirini Zira (KTH 2016)

Abstract: The present study explores the relationship between skill mismatch in two main categories, numeracy and literacy, and aggregate productivity as derived from a decomposition of productivity into within-firm productivity and allocative efficiency. Skill mismatch is considered a rather persistent phenomenon with long lasting effects in various aspects. In the analysis covered, OECD Survey of Adult Skills (PIAAC) database was employed for the aggregated indicators of skill mismatch while productivity was measured using ORBIS commercial database. The key findings reveal a strong and negative relationship between skill mismatch in numeracy and productivity, which stems from a negative relationship between the same category and the within-firm labor productivity. Under-skilling in numeracy exhibits a negative effect on productivity while over-skilling seems not to be related in the current specification. Based on the relationship between competition and productivity, market power is used to control for the competition in different sectors. The results suggest that higher market share translates to higher productivity and the relationship is statistically significant.