Employment Mismatches Drive Expectational Earnings Errors among Mozambican Graduates

Sam Jones, Ricardo Santos and Gimelgo Xirinda

The World Bank Economic Review, 2024, vol. 38, issue 1, 51-73

Abstract: Biased beliefs about future labor-market earnings are commonplace. Based on a longitudinal survey of graduate work transitions in Mozambique, this study assesses the contribution of employment mismatches to a large positive gap between expected (ex ante) and realized (ex post) earnings. Accounting for the simultaneous determination of pecuniary and non-pecuniary work characteristics, employment mismatches are found to be material and associated with large earnings penalties. A decomposition of these expectational errors shows that around two-thirds are attributable to employment mismatches, suggesting job seekers systematically overestimate the ease of securing “good jobs.”

Keywords: job mismatch; Mozambique; biased beliefs; tracer study; wage expectations (search for similar items in EconPapers)
Date: 2024
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