Education and skills mismatch in the Italian graduate labour market

Abstract

This paper focuses on education and skills mismatch among Italian graduates. Indicators for over- and under-utilization of education and under-utilization of skills are included as explanatory factors in a wage equation, testing theories that could explain the effect of over-schooling on wages. We find little evidence to support assignment theory and also identify a relatively weak wage effect arising from educational mismatch associated with employers', as opposed to employees', perceptions of the job requirements. Our interpretation is that some employers have re-categorized jobs as requiring a degree, when they were previously filled by non-graduates, and many have not altered pay scales accordingly.