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Working Paper 326 - Youth Jobs, Skill and Educational Mismatches in Africa
This paper contributes to the empirical literature on the incidence of skill and educational mismatches of African youth and explores the linkages between job mismatch and wages, job satisfaction, and on-the-job search. It uses school-to-work transition survey datasets from 10 African countries and controls for unobserved heterogeneity, sample selection bias and endogeneity problems during the estimation of job mismatch. Results show that skill and educational mismatches are prevalent in Africa: 17.5% of employed youth are overskilled, 28.9% underskilled, 8.3% overeducated and 56.9% undereducated. Our estimation results reveal that overskilling and overeducation are associated with a wage penalty and undereducation leads to a wage premium. In addition, both overskilling and overeducation reduce job satisfaction and increase youth’s likelihood of on-job search. Our pseudo-panel approach also suggests that skill and educational mismatches of youth are persistent over time and skill-mismatched youth are more likely to transition to better-matched jobs than youth with inadequate education. Finally, our results show that unemployment has a scarring effect for underskilled youth and both a scarring effect and a stepping-stone effect for overskilled and overeducated youth. The findings have important policy implications on how to address the persistent skill and educational mismatches among employed African youth..