in the Spanish Labour Market: The Consequences on Job Satisfaction of Educational and Skill Mismatches in the Spanish Labour Market: A Panel Analysis Lourdes Badillo-Amador † Ángel López Nicolás ‡ Luis E. Vila ± † Technical University of Cartagena ‡ Technical University of Cartagena, CRES and FEDEA ± University of Valencia XXXIII, Symposium of Economic Analysis, Zaragoza, 2008

Objective Analysis of the job satisfaction consequences Educational mismatch Skill mismatch Relevance of unobserved heterogeneity Dynamic structure of workers’ job satisfaction

Motivation Job satisfaction can help to explain the worker’s whole package of both pecuniary and non-pecuniary rewards from work Job satisfaction can clarify the consequences of job-worker mismatches on benefits from work

Motivation Scarce research has studied the job satisfaction consequences of both educational and skill mismatches, and cross-sectional analyses has been carried out

Two strong assumptions under Cross-Sectional analyses Motivation Two strong assumptions under Cross-Sectional analyses Workers’ observable characteristics are not correlated with unobserved factors that also affect job satisfaction Job satisfaction has no inter-temporal dependence, which implies that current scores of job satisfaction are not influenced by previous experiences

Attrition bias is also taken into account Motivation The present study considers Longitudinal analyses in order to allow for unobserved heterogeneity, and state dependence Attrition bias is also taken into account

2. Job-worker matches: incidence and relationship Structure 1. Data 2. Job-worker matches: incidence and relationship 3. Models and Method 4. Results 5. Conclusions

European Community Household Panel 1. Data Spanish data European Community Household Panel (1994 – 2001) Excludes Trainees and workers in unpaid jobs Those who either did not participate in the first wave or only took part in this one Sample Includes Wage-earners aged between 16 and 64 years who work at least 15 hours per week in their main job 15,685 valid records

Education matches: modal definition Adequately educated worker 2. Job-worker matches Education matches: modal definition Required education (RE) Educational mode of workers in the same occupational category (ISCO88/2digit level) Adequately educated worker Worker’s education level = RE Overeducated worker Worker’s education level > RE Undereducated worker Worker’s education level < RE

2. Job-worker matches The extend of a worker’s educational mismatch was determined by comparing the number of years of required education by his/her job with the number of years of education level attained Yrs. Overeducation = Schooling Yrs. – RE Yrs. If Schooling Yrs. > RE Yrs, 0 otherwise Yrs. Undereducation = RE Yrs. - Schooling Yrs. If Schooling Yrs. < RE Yrs, 0 otherwise

Skill matches: workers’ self-assessment 2. Job-worker matches Skill matches: workers’ self-assessment i) Have your studies or your training provided you with the skills needed for your current type of work? ii) Do you feel that your skills or personal capabilities would allow you to do a more demanding job than the one you do now? Yes No i) ii) Overskilled Wrongly skilled Adequately skilled Underskilled

2. Job-worker matches Proportion of skill and education job-worker matches and association degree

3. Models and Method (1) (2) (3) (i = 1,…,N) (t = 2,…,Ti)

(Mundlak, 1978; Wooldridge, 2005) Sustituting (4) in (2) and (3) 3. Models and Method Parametrization of i (Mundlak, 1978; Wooldridge, 2005) (4) Sustituting (4) in (2) and (3) (2a) (3a)

(Inverse probability weight estimators) 3. Models and Method What estimation model can be utilized to estimate the job satisfaction when i is considered? Attrition bias appears when participants either continues or stop responding to the different survey waves for non-random reasons Pooled ordered probit model Random effect ordered probit model Consistent , but not efficient Consistent and efficient No Attrition bias Inconsistent (IPW cannot be used) Consistent with IPW (Inverse probability weight estimators) Yes

There is Attrition bias if one is significante 3. Models and Method Attrition bias tests (Verbeek & Nijman, 1992) Increasing the models by one of the following variables There is Attrition bias if one is significante (Estimation by Pooled ordered probit models with IPW) Whether or not an individual responds in the next wave Whether or not an individual answers in all waves Number of waves that a worker is in the panel

Inverse Probability Weight estimators (IPW) 3. Models and Method Two kinds of Inverse Probability Weight estimators (IPW) Probability of response of each individual in each wave Explanatory variables valued as in the first wave Explanatory variables valued as in the previous wave

Estimation results of job satisfaction. Equation (1)

Estimated coefficients for Attrition tests 4. Results Estimated coefficients for Attrition tests

IPW referred to previous wave were preferred 4. Results Consistent estimates are obtained by Pooled ordered probit model with IPW estimators IPW referred to previous wave were preferred

Estimation results of job satisfaction. Equations 2a and 3a

4. Results Predicted Probability Distribution of Job Satisfaction for a Reference Individual and Marginal Effects. Equation (3a)

Weak relationship between education and skill job-worker matches 5. Conclusions Weak relationship between education and skill job-worker matches 35% of workers have the same kind of fit under education and skill mismatch criteria Its association degree is lower than 0.1 in a scale from 0 to 1

The cross-sectional analysis is misleading 5. Conclusions The cross-sectional analysis is misleading Educational mismatches lost its influence in workers’ job satisfaction after allowing for unobserved heterogeneity The influence of education mismatch in workers’ job satisfaction is consequence of the unobserved time-invariant characteristics of individuals

Skill mismatches matter to workers 5. Conclusions Skill mismatches matter to workers After controlling for unobserved heterogeneity the skill job-workers mismatches still affect negatively to workers’ job satisfaction

Persistence of job satisfaction 5. Conclusions Persistence of job satisfaction Workers’ current job perception depends on their own previous job satisfaction