Publication: Vertical Skills Mismatch in Türkiye’s Labor Market: Evidence from Refined Measures
Loading...
Published
2025-07-31
ISSN
Date
2025-07-31
Author(s)
Paul, Saumik
Editor(s)
Abstract
This paper examines vertical skills mismatch in Türkiye using a refined measure that adjusts for occupation, age group, sector, and year to isolate genuine education-job misalignment from compositional artifacts. Drawing on nationally representative labor force survey microdata from 2009 to 2022, the authors show that overeducation and undereducation are both widespread, together affecting more than half of wage-employed workers. The refined measure yields a flatter time trend in mismatch incidence than the standard occupation-only approach - correcting for rising educational attainment among younger cohorts - and produces a slightly lower overall mismatch rate. The authors analyze how mismatch incidence and its wage consequences vary by job- and worker-side characteristics, including firm size, formality, gender, place of birth, and recent job entry. Overeducation is particularly concentrated in formal jobs and medium-sized and large firms, where employers may rely more heavily on educational credentials such as screening devices. Undereducation is more prevalent in micro firms and informal jobs, where hiring norms tend to be more flexible. Compared to matched peers, overeducated workers earn substantially less, while undereducated workers earn modest wage premiums. Mismatch-related wage penalties are largest among women, foreign-born workers, and low wage earners. These findings underscore the value of refined measurement for diagnosing labor market inefficiencies and designing effective policies.
Link to Data Set
Citation
“Paul, Saumik; Raju, Dhushyanth. 2025. Vertical Skills Mismatch in Türkiye’s Labor Market: Evidence from Refined Measures. Social Protection Discussion Paper; No.2518, June 2025. © World Bank. http://hdl.handle.net/10986/43527 License: CC BY-NC 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication The Impact of Emigration on Source Country Wages : Evidence from the Republic of Moldova(2011-08-01)Thousands of Moldovans emigrated for work abroad over the last few years following nearly a decade of economic stagnation in their home country. At about 30 percent of the labor force, Moldova's emigrant population is in relative terms among the largest in the world. This study uses a unique household survey to examine the impact of emigration on wages in Moldova. The authors find a positive and significant impact of emigration on wages and the result is robust to the use of alternative samples and specifications. The size of the emigration coefficient varies depending on the sample and model specification, but the baseline result suggests that, on average, a 10 percent increase in the emigration rate is associated with 3.2 percent increase in wages. At the same time, there is evidence of significant differences across economic sectors in the estimated effect of emigration on wages. The authors speculate and provide some evidence that offsetting changes in labor demand, as revealed by information on employment growth by sector, may help explain some of the heterogeneity.Publication Fifteen Years of Inequality in Latin America : How Have Labor Markets Helped?(World Bank, Washington, DC, 2013-03)Household income inequality has declined in Latin America in the past decades, contributing significantly to poverty reduction in the region. Although available evidence shows that changes in the labor income are among the main factors behind these inequality trends, few studies have analyzed more closely the labor market dynamics that have led to a decline in total income inequality in some countries, but also to an increase in others. Using household survey data for a sample of 15 countries in Latin America from 1995 to 2010, this paper uses an extension of the Juhn-Murphy-Pierce methodology to decompose changes in labor income inequality (hourly wages) into a quantity effect (capturing changes in the distribution of workers' skills), price effect (reflecting returns to skills), and unobservables effect (other components, within skill groups, affecting labor income). The results show that falling returns to skills for both education and experience is, on average, driving the decline in labor income inequality in Latin America. The quantity effect, in turn, has contributed little to inequality reduction, mostly attributable to a larger dispersion in years of experience, possibly linked to the region's demographic transition and to significant increases in female labor force participation. Additional findings show that wage inequality, still high in the region, is coupled with inequality in terms of hours worked. The paper complements the existing literature by presenting separate results for males and females, as well as formal and informal sector workers as an attempt to control for secular shifts in these characteristics.Publication The Labor Market Story Behind Latin America's Transformation(Washington, DC, 2012-10)After a robust recovery following the global crisis, Latin American and the Caribbean (LAC) has entered into a phase of lower growth dynamics: economic activity in the region is expected to expand by about 3 percent in 2012, after having grown at 4 percent in 2011 and 6 percent in 2010. This deceleration is not specific to LAC but is part of a global slowdown. World growth is indeed declining sharply, from 4.5 percent in 2011 to about 2.3 percent in 2012. Notably, the slowdown in middle-income regions has taken place in a highly synchronized manner: growth rates in LAC, Eastern Europe and South East Asia have fallen by a very similar magnitude (about 3 percentage points) between 2010 and 2012. While this synchronization reflects exogenous (global) forces the spillover to emerging markets of weaker activity in the world's growth poles, particularly Europe and China it also reflects endogenous (internal) dynamics, particularly the fact that many Middle Income Countries (MIC) had already reached in 2010-2011 the peak of their own business cycles. This synchronicity notwithstanding, the 2012 growth forecasts for individual countries in LAC are significantly heterogeneous, reflecting complex interactions between external and country-specific factors. The first chapter, which is shorter, concerns the economic juncture and growth prospects. The second chapter, which is longer and more substantive, deals with selected labor issues from both the structural and cyclical viewpoints.Publication Export Liberalization, Job Creation and the Skill Premium : Evidence from the U.S.-Vietnam Bilateral Trade Agreement(World Bank, Washington, DC, 2013-04)This paper explores how the expansion of labor-intensive manufacturing exports resulting from the United States-Vietnam Bilateral Trade Agreement in 2001 translated into wages of skilled and unskilled workers and the skill premium in Vietnam through the channel of labor demand. In order to isolate the impacts of trade shock from the effects of other market-oriented reforms, a strategy of exploiting the regional variation in difference in exposure to trade is employed. Using the data on panel individuals from the Vietnam Household Living Standards Surveys of 2002 and 2004, and addressing the issue of endogeneity, the results confirm the existence of a Stolper-Samuelson type effect. That is, those provinces more exposed to the increase in exports experienced relatively larger wage growth for unskilled workers and a decline of (or a smaller increase in) the relative wages of skilled and unskilled workers. During the period 2000-2004, the skill premium increased for Vietnam's economy as a whole in the sample of panel individuals. Thus, the Stolper-Samuelson type effect appears to have mitigated but did not outweigh the impacts of other factors that contributed to the rise in the skill premium.Publication Gender Equality, Poverty and Economic Growth(World Bank, Washington, DC, 2007-09)This paper reviews empirical findings from economic analyses of the role of gender equality and women's empowerment in reducing poverty and stimulating growth. Going beyond the large literature documenting the impact of female education on a range of development outcomes, the paper presents evidence on the impact of women's access to markets (labor, land, and credit) and women's decision-making power within households on poverty reduction and productivity at the individual and household level. The paper also summarizes evidence from studies examining the relationship between gender equality and poverty reduction and growth at the macro level. Although micro level effects of gender equality on individual productivity and human development outcomes have been well documented and have important ramifications for aggregate economic performance, establishing an empirical relationship between gender equality and poverty reduction and growth at the macro level has proven to be more challenging. The paper concludes by identifying priority areas for future research.
Users also downloaded
Showing related downloaded files
Publication From Patriarchy to Policy(Washington, DC: World Bank, 2025-05-29)Legal institutions play an important role in shaping gender equality in economic domains, from inheritance to labor markets. But where do gender equal laws come from? Using cross-country data on social norms and legal equality, this paper investigates the socio-cultural roots of gender inequity in the legal system and its implications for female labor force participation. To identify the impact of social norms, the analysis uses an empirical strategy that exploits pre-modern differences in ancestral patriarchal culture as an instrument for present-day gender norms. The findings show that ancestral patriarchal culture is a strong predictor of contemporary norms, and conservative social norms are associated with more gender inequality in the de jure legal framework, the de facto implementation of laws, and the labor market. The paper presents evidence for a political selection mechanism linking norms to laws: countries with more conservative norms elect political leaders who are more hostile to gender equality, who then pass less progressive legislation. The results highlight the cultural roots and political drivers of legalized gender inequality.Publication Tradeoffs over Rate Cycles(Washington, DC: World Bank, 2025-05-23)Central banks often face tradeoffs in how their monetary policy decisions impact economic activity (including employment), inflation and the price level. This paper assesses how these tradeoffs have evolved over time and varied across countries, with a focus on understanding the post-pandemic adjustment. To make these comparisons, we compile a cross-country, historical database of “rate cycles” (i.e., easing and tightening phases for monetary policy) for 24 advanced economies from 1970 through 2024. This allows us to quantify the characteristics of interest rate adjustments and corresponding macroeconomic outcomes and tradeoffs. We also calculate Sacrifice Ratios (output losses per inflation reduction) and document a historically low “sacrifice” during the post-pandemic tightening. This popular measure, however, ignores adjustments in the price level—which increased by more after the pandemic than over the past four decades. A series of regressions and simulations suggest monetary policy (and particularly the timing and aggressiveness of rate hikes) play a meaningful role in explaining these tradeoffs and how adjustments occur during tightening phases. Central bank credibility is the one measure we assess that corresponds to only positive outcomes and no difficult tradeoffs.Publication Rethinking Fiscal Policies(Washington, DC: World Bank, 2025-05-27)This paper examines the redistributive impact of fiscal policy—specifically taxes and transfers—on poverty and inequality in eight countries in the Middle East and North Africa: the Arab Republic of Egypt, Djibouti, the Islamic Republic of Iran, Iraq, Jordan, Morocco, Tunisia, and the West Bank and Gaza. Utilizing the Commitment to Equity framework, the analysis evaluates how fiscal interventions alter income distribution across these diverse national contexts. The results indicate that direct cash transfers and social assistance programs are generally effective in reducing poverty and shielding vulnerable populations, while in-kind benefits—particularly in education and healthcare—significantly contribute to mitigating income inequality. In contrast, generalized subsidies, especially in the energy sector, are fiscally burdensome and largely regressive, offering limited equity gains. Indirect taxes, although important for revenue generation, often exacerbate income disparities. The study underscores the need for comprehensive fiscal reforms, including the expansion of well-targeted transfers, adoption of progressive taxation, and reallocation of inefficient subsidies toward investments in human capital. Successful initiatives, such as Egypt’s Takaful and Karama and Jordan’s Takaful and bread subsidy compensation programs, illustrate scalable models of effective redistribution. Moreover, the Islamic Republic of Iran’s progressive tax policies highlight viable pathways to equitable revenue mobilization. Strengthening investment in education and health is essential for promoting long-term equity, enhancing upward mobility, and supporting inclusive and sustainable development across the region.Publication Yield Gains from Balancing Fertilizer Use(Washington, DC: World Bank, 2025-05-29)As with most agricultural inputs, the optimal use of fertilizer leverages the production complementarities between different types of nutrients. Wide variation in the intensity of nutrient application rates suggests there are potentially large productivity gains to be had from rebalancing fertilizer use across nutrient types even under a fixed expenditure budget. Using detailed information on a large sample of rice fields across three states in eastern India, this paper investigates whether a more balanced use of fertilizer—measured as the ratio of potash to nitrogen applied to a field—can lead to higher yields and revenues. To address the endogeneity of fertilizer application decisions, the analysis exploits the fact that nitrogen-based fertilizers demanded by Indian farmers are mostly produced domestically in a limited number of manufacturing plants, while all potash-based fertilizers must be imported by ship from abroad. Instrumenting for the ratio of potassium-to-nitrogen fertilizer applied on a field with the relative travel distances between farmers’ villages and both the nearest urea production plant and the nearest international port, the paper estimates the impact of more balanced fertilizer use on yields and revenues. The estimates show that at median levels of fertilizer use, and keeping the level of expenditure on fertilizers constant, rebalancing fertilizer application choices such that the potassium-to-nitrogen ratio of fertilizer is doubled would lead to a 4.8 percent increase in yield.Publication Beyond Aggregates(Washington, DC: World Bank, 2025-05-21)This paper develops a bottom-up, sector-specific approach to modeling potential output that overcomes limitations of traditional top-down estimates for long-term projections and policy analysis. The model disaggregates total-factor productivity (TFP) growth into within-sector productivity effects and between-sector reallocations. Such endogenous between effects capture structural transformation, notably the shift from low-productivity sectors like agriculture to higher-productivity industrial and service sectors—a key driver of growth in developing countries. At the heart of the framework, wedges in sectoral factor prices, substitution elasticities, and productivity differentials describe the contribution of between-effects to aggregate productivity. Although the approach here can be applied to any macro-structural model, its benefits are illustrated by introducing it into the World Bank’s semi-structural models for Ghana and the Kyrgyz Republic to showcase its potential to enhance the analysis of long-run growth dynamics through structural change.