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The impact of skill mismatch on unemployment, informality, and labour turnover

Published online by Cambridge University Press:  13 November 2024

Luz Adriana Flórez Open the ORCID record for Luz Adriana Flórez [Opens in a new window]  and
Leidy Gómez
Luz Adriana Flórez*
Affiliation:
Research Department, Central Bank of Colombia, Medellin, Colombia
Leidy Gómez
Affiliation:
EAFIT University, Medellin, Colombia
*
Corresponding author: Luz Adriana Flórez; Email: [email protected]
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Abstract

The objective of this paper is to analyse the impact of skill mismatch on labour turnover, unemployment, and informality, in the case of Colombia. We study Colombia because it is a developing country with one of the highest levels of unemployment and informality in Latin America, along with very restrictive institutions, such as the minimum wage. We found that skill mismatch can explain the high turnover of workers in the Colombian labour market, evident in the increase in hirings and also in separations. Additionally, we find a positive significant effect of skill mismatch on the levels of informality, but no significant effect on unemployment. This evidence remains even once we consider the role of labour market institutions such as minimum wage and non-wage labour costs.

Keywords

informalityoverqualificationskill mismatchunemploymentunderqualificationworker reallocationI25J46J63J64
Type
Original Article
Information
The Economic and Labour Relations Review , Volume 35 , Issue 4 , December 2024 , pp. 980 - 999
Copyright
© Banco de la República de Colombia, 2024. Published by Cambridge University Press on behalf of The University of New South Wales

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