Research has shown that overskilling — where workers are not fully using their skills in their jobs — can lead to reduced wages and job satisfaction. This report builds on that previous research and investigates the persistence of overskilling mismatch and the effect of past mismatch on wages.
Finding yourself in a job that does not match your skills or education level can be detrimental in a number of ways. Using data from the Household Income and Labour Dynamics in Australia (HILDA) Survey, this study builds on previous work by looking at the impact of being over-skilled or over-educated or both on an individual’s wages as well as their level of job satisfaction. The study distinguishes between ‘genuine’ mismatch (wages and job satisfaction are both low) and ‘apparent’ mismatch—where a job may pay less but has been accepted because it has some other redeeming attribute, such as greater flexibility of work hours. The study finds that mismatch is often characterised by both lower wages and job satisfaction.
When the skills workers have do not match the skills that jobs require, a number of negative labour market outcomes can occur, including productivity and efficiency losses, lowered earnings and reduced job satisfaction. Using data from the Household Income and Labour Dynamics in Australia (HILDA) survey, this study examines the degree of job mismatch experienced by workers. The mismatch between the perceived skill level of the worker and the skill level of the job is considered as overskilling. The report finds that workers with vocational qualifications, particularly at the certificate III or IV level, are less likely to experience overskilling.