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Mismatch In Human Capital Accumulation

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  • Russell Cooper
  • Huacong Liu

Abstract

This article studies the allocation of heterogeneous agents to levels of educational attainment. The goal is to understand the magnitudes and sources of mismatch in this assignment, both in theory and in the data. The article presents evidence of substantial mismatch between ability and educational attainment across 21 OECD countries, with a main focus on Germany, Italy, Japan, and the United States. Model parameters are estimated using a simulated method of moments approach. The main empirical finding is that measured mismatch arises largely from noise in test scores and does not reflect borrowing constraints. Taste shocks play a minor role in explaining mismatch.

Suggested Citation

  • Russell Cooper & Huacong Liu, 2019. "Mismatch In Human Capital Accumulation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 60(3), pages 1291-1328, August.
    • Handle: RePEc:wly:iecrev:v:60:y:2019:i:3:p:1291-1328
    DOI: 10.1111/iere.12386
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    Cited by:

    1. Tang, Rongsheng & Wang, Gaowang, 2021. "Educational mismatch and earnings inequality," MPRA Paper 106953, University Library of Munich, Germany.
    2. Tang, Rongsheng & Wang, Gaowang, 2021. "Educational mismatch and income inequality," Economic Modelling, Elsevier, vol. 100(C).
    3. Cervantes, Carla Varona & Cooper, Russell, 2022. "Labor market implications of education mismatch," European Economic Review, Elsevier, vol. 148(C).

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