The Moderating Effect of Workplace Learning on the Relationship Between Field-of-Study Mismatch and Workforce Outcomes

• In Event: Higher Education, Mobility and Study Abroad

Proposal

Introduction and Theoretical Frameworks
The match between education and employment has been a consistent topic of interest in the midst of higher education expansion and rapidly changing industrial needs (Serikbayeva & Abdulla, 2022). Education-job matches among workers are considered a criterion for evaluating the efficiency of the education system (Witte & Kalleberg, 1995). Diverse countries have been focusing on the education-job mismatch as it is associated with individual labor market outcomes and economic and social costs for society.
The impact of qualification mismatches on workforce outcomes can be explained by human capital theory (HCT) and assignment theory (Hartog, 2000). While HCT primarily focuses on the positive wage returns of investing in education and training, the assignment theory postulates that the allocation of individuals to specific occupations depends on the match between their skills and job requirements based on labor demand and supply (Sattinger, 1993). Thus, it predicts that mismatched workers will have a wage penalty and lower productivity due to their lack of field-specific skills compared to their well-matched peers (Wolbers, 2003).
Empirical evidence confirms that education-job mismatch is correlated with higher wage penalties, lower work satisfaction, and reduced productivity (Choi et al., 2020; Kim et al., 2016; Montt, 2017). Prior research has mainly focused on how to accurately capture the qualification mismatch or its impact on the wage penalty, considering individual (e.g., human capital) and institutional levels (e.g., labor supply and demand) (Choi et al., 2020; Perry et al., 2016). However, less is known about the workforce outcomes considering field-of-study mismatch (Hur et al., 2019), which occurs when workers’ field-of-study for the terminal degree (e.g., English) is different than the primary field of the occupation (e.g., statistician) (Sloane, 2003). We have little understanding of how this impact on income penalties differs by worker characteristics or how this impact can be mitigated or relaxed through learning in the workplace context.
Thus, this study aimed to further investigate the relationship between field-of-study mismatch and earnings in the workplace context. Considering the assignment theory describing the impact of mismatches on wage penalties, this study investigated the role of continuing learning at work in mitigating this impact from a human capital perspective. This paper provides practical and policy implications on how to improve workforce outcomes despite the education mismatch by individualizing assistance for target groups and facilitating workplace learning.

Research Methods
This study used data from the OECD's Program for the International Assessment of Adult Competencies (PIAAC). The survey was collected with around 5,000 adults aged 16 to 65 in each participating country (OECD, 2021) and offers broad information on education, mismatch, earnings, and learning. We used public use data from 42,646 employees across 25 countries, which allowed us to see individuals’ international standard classification of occupations (ISCO), wage, and so on.
The dependent variable was individual hourly earnings in deciles, including bonuses. The independent was a dummy-coded field-of-study mismatch, which was measured based on the major of respondents’ highest degree and their occupational code, following Montt (2015)’s strategy. The moderators consist of gender, immigrant status, and workplace learning variables (formal and non-formal). The control variables included age, major, highest education, immigrant generation, numeracy scores, tenure, tenure interaction term, firm size, contract work, private sector, and country dummies.
Mincer’s earning equation was used (Choi et al., 2020; Perry et al., 2016; Serikbayeva & Abdulla, 2022). We used moderators such as gender and immigrant status in model 1, flags of formal and non-formal education participation in model 2, OJT and seminar/workshop participation in model 3. We also did a supplementary analysis, where we included the over-qualification mismatch (OM), the over-qualification and field-of-study mismatch (OFM), and interaction terms. All the models were estimated with weighted replicate samples and plausible values of numeracy scores.

Results and Discussion
Firstly, the field-of-study mismatch showed negative effects on the earnings return across all the models compared to the well-matched group. The effect of field-of-study mismatch on wages differed by gender and immigrant status. When adding an interaction between mismatch and gender, it showed that field-of-study mismatched workers who were female earned less wages than those who were male. Similarly, field-of-study mismatched workers who were born abroad and used foreign languages earned lower wages than those who were native.
Secondly, the effect of field-of-study mismatch on wage penalties was positively moderated through non-formal education, thus relaxing the negative impact. On the other hand, participating in formal education did not have a main effect on earnings or a moderating effect on the relationship between field-of-study and earnings.
Thirdly, in the context of in-company training settings, participating in OJT and seminar/workshop showed a positive main effect on earnings, respectively. Participating in a seminar/workshop relaxed the negative relationship between field-of-study mismatch and earnings, whereas the moderating effect of OJT was not significant on this relationship.
Lastly, the additional specifications included the OM and the OFM. OM showed the greatest income penalty, followed by OFM and field-of-study mismatch. The interaction term between the OFM and demographic variables or between the OFM and workplace learning variables in predicting wages was not significant.
These results confirmed the prior study’s evidence on the relationship between mismatch and wage penalties (Choi et al., 2020; Montt, 2017; Serikbayeva & Abdulla, 2022). This study discovered that the field-of-study mismatch can result in a large wage penalty for female or immigrant workers. It confirms the rigid labor market structure of the countries and the need for developing individualized measures for the target group (Hur et al., 2019; Pivovarova & Powers, 2022). Additionally, this study captured the fact that the negative impact of field-of-study mismatch can be mitigated through non-formal education and training, such as workshops and seminars, rather than through formal education. It implies that firms can provide diverse education and training opportunities for field-of-study mismatched employees to increase their labor productivity. The moderating results were not significant for workers who were both field-of-study and overqualification mismatched. This may matter more in the context of the job assignment and allocation process in the dynamics of labor supply and demand.

Author

• Seong Ji Jeong, The Ohio State University-Columbus - Columbus, OH