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Employment Mismatches Drive Expectational Earnings Errors among Mozambican Graduates

Author

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  • Sam Jones
  • Ricardo Santos
  • Gimelgo Xirinda

Abstract

Biased beliefs about future labor-market earnings are commonplace. Based on a longitudinal survey of graduate work transitions in Mozambique, this study assesses the contribution of employment mismatches to a large positive gap between expected (ex ante) and realized (ex post) earnings. Accounting for the simultaneous determination of pecuniary and non-pecuniary work characteristics, employment mismatches are found to be material and associated with large earnings penalties. A decomposition of these expectational errors shows that around two-thirds are attributable to employment mismatches, suggesting job seekers systematically overestimate the ease of securing “good jobs.”

Suggested Citation

  • Sam Jones & Ricardo Santos & Gimelgo Xirinda, 2024. "Employment Mismatches Drive Expectational Earnings Errors among Mozambican Graduates," The World Bank Economic Review, World Bank, vol. 38(1), pages 51-73.
    • Handle: RePEc:oup:wbecrv:v:38:y:2024:i:1:p:51-73.
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    File URL: http://hdl.handle.net/10.1093/wber/lhad018
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    References listed on IDEAS

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    1. Sam Jones & Thomas Pave Sohnesen & Neda Trifkovic, 2023. "Educational expansion and shifting private returns to education: Evidence from Mozambique," Journal of International Development, John Wiley & Sons, Ltd., vol. 35(6), pages 1407-1428, August.
    2. Girum Abebe & A Stefano Caria & Marcel Fafchamps & Paolo Falco & Simon Franklin & Simon Quinn, 2021. "Anonymity or Distance? Job Search and Labour Market Exclusion in a Growing African City [Endogenous Stratification in Randomized Experiments]," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 88(3), pages 1279-1310.
    3. Amarakoon Bandara, 2019. "Youth labor market expectations and job matching in sub-Saharan Africa: evidence from school-to-work transition surveys," Applied Economics, Taylor & Francis Journals, vol. 51(8), pages 762-780, February.
    4. Fiona Carmichael & Christian Darko & Shireen Kanji, 2021. "Wage effects of educational mismatch and job search in Ghana and Kenya," Education Economics, Taylor & Francis Journals, vol. 29(4), pages 359-378, July.
    5. Guillermo Montt, 2017. "Field-of-study mismatch and overqualification: labour market correlates and their wage penalty," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 6(1), pages 1-20, December.
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