MISMATCH IN HUMAN CAPITAL ACCUMULATION

Russell Cooper, Huacong Liu

Research output: Contribution to journalArticle

Abstract

This article studies the allocation of heterogeneous agents to levels of educational attainment. The goal is to understand the magnitudes and sources of mismatch in this assignment, both in theory and in the data. The article presents evidence of substantial mismatch between ability and educational attainment across 21 OECD countries, with a main focus on Germany, Italy, Japan, and the United States. Model parameters are estimated using a simulated method of moments approach. The main empirical finding is that measured mismatch arises largely from noise in test scores and does not reflect borrowing constraints. Taste shocks play a minor role in explaining mismatch.

Original languageEnglish (US)
Pages (from-to)1291-1328
Number of pages38
JournalInternational Economic Review
Volume60
Issue number3
DOIs
Publication statusPublished - Jan 1 2019

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All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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