Abstract

The paper introduces a new measure of educational mismatch at the firm level, constructed by merging firm and individual data at the sector-firm size-year level. This measure captures both the incidence of mismatch and its type – whether overeducation, undereducation, or a mix of the two. We then assess the role of human resource practices in reducing the incidence of educational mismatch in Italian firms by estimating econometric models that control for a rich set of firm characteristics, as well as year and industry-region fixed effects. On-the-job training is consistently linked to lower educational mismatch; narrower spans of control and private recruitment agencies are also associated with lower mismatch, but show sector- and type of mismatch-specific associations. Public employment services show no consistent relationship with educational mismatch, and second-level wage bargaining is negatively associated with mismatch in firms with prevalent overeducation, but positively associated in those with prevalent undereducation.