Educational mismatch and occupational mobility in metropolitan Brazil

Luciano Machado, BNDES
Ana Hermeto, Cedeplar, UFMG

This article seeks to analyze educational mismatch and occupational mobility in metropolitan labor market in Brazil, considering a supply and demand framework. We focus on four types of occupational mobility: upward mobility for the overeducated, downward mobility for the undereducated and upward and downward movements for the matched workers, using panel data from the Monthly Employment Survey (IBGE) over the 2002-2008 period, based on the birth-cohort synthetic panel estimation. Particularly, we analyze how cyclical conditions in the labor market, captured by the unemployment rate, are related to upward and downward movements determined in the context of the education-occupation mismatch at the individual level occupations. The study addresses the effects of economic cycles, composition of supply, period and cohort to explain the behavior of mobility considered. Results show that the cycles faced by individuals in the labor market are relevant to their propensity to occupational mobility, impacting both upward and downward movements. Thus, theories focusing only on individual attributes to explain the behavior of educational mismatch in occupations over time fail to take into account the role of business cycles in facilitating or not the occupational matching process in terms of schooling. Regarding cohort effects, it was found that the possibilities of adjustment are associated with early stages of the careers of individuals in the labor market, for the over and under-educated workers. The pro-cyclical behavior of upward mobility of the over-educated is explicit evidence that conditions in the labor market influence the matching of workers in occupations. The fact that the unemployment rate affects the mobility decisions also impacts the duration of over-education in the labor market, so this situation may have occupational characteristics of short or long term depending on the cyclical conditions of the economy.