Economics Seminar - Skill Mismatch Unemployment

What is the contribution of mismatch between the skills demanded by vacancies and the skills supplied by the unemployed to the unemployment rate? We measure skill mismatch unemployment using a search and matching framework in which unemployed workers and vacancies meet randomly, but the probability of the meeting resulting in a match depends on how closely the unemployed worker’s skillset aligns with the job requirements. Using the matched CPS, O*NET, and HWOL data from 2005 to 2018, we find that skill matching efficiency between vacancies and the unemployed decreased during the Great Recession, but has since increased back to the pre-recession levels.