This effort takes a different approach to modeling job matches than previous theoretical research. Rather than viewing a bad match as a mistake that will be corrected by turnover when more information is available, matches in which workers are either over- or under-qualified may in fact be optimal, both ex ante and ex post. In particular, from the firm's point of view, although turnover will be higher for an overqualified worker, hiring and training costs will be lower. Further, over-qualified workers constitute a pool from which promotions are made, thereby reducing hiring costs for higher level positions. For under-qualified workers, hiring and training costs will be higher but turnover will be lower, since such workers will have fewer alternative opportunities. Employers are aware of these tradeoffs and knowingly hire mismatched workers. Similarly, workers realize that they are in a bad match, but enter such matches knowingly due to search and mobility costs and because of opportunities for promotion. Previous empirical research has been restricted by data availability to examining only education match with the worker's current job. The new data set used in this research is unique in that it provides extensive information on match between entry level requirements and worker qualifications, as well as information on promotions, training, and other information that allows a more general quantification of job match quality. Consistent with the implications of the model, empirical results indicate that workers who are over-qualified at hire receive less training and more promotions, and that workers over-qualified for their current job are more likely to quit. Gender differences in training and promotions, and working conditions as determinants or job match quality, are also examined. The significance of the research for examining the labor market is that it explains why firms hire workers that are both under- and over-qualified for jobs, and why workers accept jobs for which they are either under- or over-qualified. It adds to our knowledge of the wage gap between men and women by examining gender differences in quits and promotions. The research also contributes to public policy debate about the role of higher education in the labor market since some researchers have been concerned about over-education, arguing that it is correlated with a number of attributes thought to adversely affect productivity. This project demonstrates that there are trade-offs between education and other worker qualifications, so that concern about over-education may be misdirected. The project furthers VPW program objectives to provide opportunities for women to advance their careers in science or engineering through research, and to encourage other women to pursue careers in these areas through the investigator's enhanced visibility as a role model on the host campus. The proposed activities which contribute to the second objective include: hosting a symposium on the role of women in the economics profession; teaching a course in labor economics; hosting "brown bag" lunches; meeting individually with women students in economics; and presenting papers in seminars.
