Occupational mismatch in European labour markets: A joint analysis of education, skills, and severe mismatch

This paper examines occupational mismatch in European labour markets by jointly analysing overeducation, overskilling, and their overlap, defined as severe mismatch. Using recent OECD-PIAAC data for nine European countries, the study compares statistical and subjective measures of mismatch and estimates multinomial logit models to identify its main determinants. The results show that mismatch is widespread but highly heterogeneous across countries and worker groups, and that measurement choices substantially affect estimated patterns. Severe mismatch emerges as a distinct and relevant form of human capital underutilisation, especially among highly educated workers and STEM graduates. Cross-country differences suggest that mismatch reflects not only individual characteristics but also broader institutional and structural conditions. The findings highlight the need for policies that improve both skill formation and the effective use of skills in the workplace.