Imperfect Self-knowledge about Skills and Skill Mismatch

Daniel Goller, Enzo Brox and Stefan Wolter

No 253, Economics of Education Working Paper Series from University of Zurich, Department of Business Administration (IBW)

Abstract: Why do young people sort into poorly fitting occupations? This paper shows that imperfect self-knowledge about skills is an important source of skill mismatch at labor market entry. We use unique data from standardized professional aptitude tests linked to administrative records on educational trajectories and early labor market outcomes in Switzerland. The data allow us to observe objective skills and subjective skill beliefs for many productivity-relevant skills in a high-stakes setting. We document large differences among individuals in how well their beliefs align with their skills. Imperfect self-knowledge predicts misaligned occupational aspirations, higher realized skill mismatch, and a higher probability of dropout. Guided by a Roy-style model of occupational choice with imperfect self-knowledge, we interpret these findings as evidence that distorted self-assessments at the school-to-work transition contribute to the misallocation of talent.

Keywords: Information frictions; Occupational choice; Skill mismatch; Self-knowledge (search for similar items in EconPapers)
JEL-codes: D83 J24 J41 (search for similar items in EconPapers)
Pages: 81 pages
Date: 2026-04
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Persistent link: https://EconPapers.repec.org/RePEc:iso:educat:0253

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