Effect of earnings expectations on major-occupation mismatch decisions among new college graduates

Abstract

Major-occupation mismatch is a phenomenon where students graduated from one field of study but choose to work in another unrelated one. Due to lack of necessary skills and knowledge, the job is underperformed. As a result, the worker receives lower returns to education. These outcomes show that mismatch worse off both employer and employee.

This Thesis aims at studying a potential factor that contributes to decision to choose mismatch occupation among college graduates with focus on new graduates. The factor studied is earnings expectation, whether it has effect on decision for graduates to opt for mismatch occupation. Data used in this research comes from resumes obtained from online job market in Thailand. Results indicate that earnings expectation consistently has positive effect on probability of a choice to be chosen. If graduates expect higher earnings from a mismatch occupation, they will be more likely to choose it over the match one. Size of effect from earnings expectation depends on whether the major they graduated from trains general or specific skills. Mismatch probability changes significantly for graduates from majors that train an appropriate level of specific skills. Graduates from majors training either highly general or highly specific skills will be less responsive to earnings expectation changes.

For policy implication, the results indicate that raising earnings can reduce major-occupation mismatch for some occupations. They must require an appropriate level of specific skills, not too general or too specific.