Working Paper. No 312: Job displacement and skill mismatch

Abstract: Because of structural and technological changes, millions of employees experience job displacement every year (OECD, 2013a). Concurrently, a substantial proportion of employees can be defined as skill mismatched (OECD, 2013b). This paper explores the relationship between skill mismatch and job displacements. Are employees who are skill mismatched at their job more likely to become displaced? To explore the relationship between skill mismatch and job displacements, a dataset collected by the Programme for the International Assessment of Adult Competencies (PIAAC) from 27 countries is used. This dataset enables the identification of skill mismatch. Three measures that reflect skill mismatch in the domains of literacy, numeracy, and problem solving are used. The empirical findings suggest that over-skilled employees are less likely to be displaced, while under-skilled employees are more likely to be displaced. These findings are valid for all three skill domains.