Mismatch in the 21st Century: An Overview

The quality of matches between workers, firms, and jobs is critical for labor market efficiency and affects firm productivity and worker welfare. This paper surveys research on the determinants, measurement, and effects of occupational mismatch. After recalling theoretical frameworks based on search costs and imperfect information, we review the different forms of mismatch and the empirical measures used to analyze it depending on the available data. We then analyze factors exacerbating mismatches, such as geographical constraints, hiring and firing costs, financial barriers, and structural shocks like technological change and demographic decline. Next, we assess the impact of mismatch on productivity, wages, and career development and review the policies to reduce it, such as improving information flows, lowering search costs, and fostering skill acquisition. We conclude by identifying remaining gaps in our understanding of occupational mismatch and thus priorities for future research.