The effect of educational mismatch on the Turkish manufacturing industry

Abstract

This article explores the educational mismatch for 23 Turkish industries using all available household labour force surveys (LFSs) and annual industry and service statistics from 2004 to 2015. The main aim of this paper is first to evaluate the educational mismatch levels in the Turkish industries and then analyse its effects on the industrial total factor productivity (TFP), labour productivity, and wages. For the industrial TFP, the dynamic panel data estimations suggest that the mean value of over education years decreases the growth rate of TFP. Therefore, the widespread existence of educational mismatch implies an efficiency loss in Turkish manufacturing industries from the period 2004 to 2015. For industrial labour productivity, the modal value of education increases the labour productivity whereas there is no significant effect on industrial wages. This means that the Turkish manufacturing industries could benefit by employing more workers with the required level of schooling. This paper also controls for the birth cohort of workers to check the sensitivity of the results. These sensitivity checks consistently imply that the conclusions of this study are substantially robust to the utilisation of different specifications. © 2023 Elsevier B.V., All rights reserved.