A Numerical Simulation of Educational Mismatch in the Italian Labor Market

This paper presents a data set, associating education levels to occupations, and a methodology, which allow estimating how the distribution of the two variables could change, after some exogenous shock affecting the labor market. We assess some implications of the empirical finding that, in response to a weaker demand for labor, sufficiently educated workers would reallocate themselves into lower-ranked occupations, rather than getting unemployed. The exercise is conducted with Italian data, where 37 occupations and 10 education levels are considered. A counterfactual distribution is estimated, using a computable general equilibrium model to simulate the impact on the labor market of a trade disruption crisis with Russia.