Skills use in the workplace and its effects on wages and on job satisfaction. An application to the Spanish case
| DOI | https://doi.org/10.1108/PR-03-2017-0088 |
| Published date | 05 March 2018 |
| Pages | 494-516 |
| Date | 05 March 2018 |
| Author | Lucía Mateos Romero,Maria del Mar Salinas-Jiménez |
| Subject Matter | HR & organizational behaviour,Global HRM |
Skills use in the workplace
and its effects on wages and
on job satisfaction
An application to the Spanish case
Lucía Mateos Romero and Maria del Mar Salinas-Jiménez
Department of Economics, University of Extremadura, Badajoz, Spain
Abstract
Purpose –The purpose of this paper is to analyze the effects of labor mismatches on wages and on job
satisfaction for the Spanish case, with a distinction been made between educational and skills-related
measures of mismatch.
Design/methodology/approach –The focus is placed on the usage that the individuals do of their skills in
the workplace and different measures of skills use are considered to check the robustness of the results.
Findings –Using data from PIAAC, the results suggest that whereas educational mismatch shows greater
effects on wages, the effects of labor mismatch on job satisfaction are better explained by the relative use of
individual skills in the workplace.
Research limitations/implications –Both educational and skills mismatches are relevant for
understanding the economic effects of labor mismatch. Nevertheless, it should be taken into account that
educational mismatch is not an accurate proxy for skills mismatch, mainly when the non-monetary effects of
labor mismatch are addressed.
Practical implications –There is room to increase workers’skills utilization in the workplace, which, in
turn, would contribute to enhance individual job satisfaction and, consequently, workers productivity.
Social implications –A process of upgrading in the Spanish labor market would allow to take full
advantage of recent investments in education and skills formation done in the country in the last decades.
Originality/value –This study contributes to the literature on labor mismatch by explicitly considering
that educational and skills mismatch might reflect different phenomena and by analyzing the effects of both
types of mismatches on different labor market outcomes.
Keywords Skills, Quantitative, Advanced statistical, Educational mismatch, Relative use of skills
Paper type Research paper
1. Introduction
Over the last decades, there has been a substantial growth in enrollment rates in education
in most OECD countries. From the individuals’perspective, the main motivation to invest in
education seeks to improve labor market opportunities, reducing the probability of
being unemployed and increasing that of earning higher wages (Harmon et al., 2003).
However, there is increasing concern on potential overinvestment in education since
individuals with a high level of education might be employed in jobs with lower
requirements. In fact, the literature on overeducation has expanded in the last years
suggesting that overeducated individuals tend to receive lower wages and are more
dissatisfied with their jobs than their well-match educated peers[1].
Alongsidethe literature on overeducation,a strand of the literaturehas recently focused on
skill mismatches.From the supply side, it has been arguedthat the formal level of education is
a poor proxy of human capital given the different abilities and the heterogeneity of skills
Personnel Review
Vol. 47 No. 2, 2018
pp. 494-516
© Emerald PublishingLimited
0048-3486
DOI 10.1108/PR-03-2017-0088
Received 30 March 2017
Revised 4 September 2017
20 October 2017
Accepted 26 November 2017
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0048-3486.htm
JEL Classification —I21, J23
The authors declare that they have no conflict of interest. The authors acknowledge support and funding
from the Spanish Ministry of Economy and Competitiveness (Research Project No. ECO2014-53702-P).
LucíaMateosRomeroalsoacknowledgessupportfrom the Spanish Ministry of Education for a FPU
Program Grant.
494
PR
47,2
acquired by individuals within a same level of education (Green et al., 2002; Chevalier, 2003).
Moreover, from the demand side it is considered that measures of overeducation might be
affected by credentialism and grade inflation and that the educational requirements to get a
job offer a poor proxy for its skill content (Sánchez-Sánchez and McGuinness, 2015). Indeed,
the demand of skills has also recently attracted the attention of some authors who suggest
that, since the 1990s,there has been a relative decline in mid-levelskill jobs whereas low- and
high-skill jobs have experienced a relative increase (see Autor et al., 2006, for the USA; or
Goos et al., 2009, for several European countries).
In this context, the Spanish economy represents a good case for the study of labor
mismatches. First, education rates grew significantly in last decades, with a large proportion
of individuals getting higher education degrees, at the same time that the incidence of
overeducation rose until reaching one of the largest proportions among OECD (2013)
countries. However, it is not clear that higher levels of education translate into higher levels
of skills since the Spanish population rates among the lowest levels of proficiency in literacy
and numeracy skills (OECD, 2013). Moreover, the demand side bases to a large extent on
low-skills content jobs and, rather than a process of upgrading (i.e. a decrease in demand for
unskilled workers), the Spanish labor market has experienced a process of polarization since
the late 1990s (Anghel et al., 2013). Under these circumstances, overeducation would not
necessary imply an under-utilization of skills and educational and skills mismatches might
clearly reflect different phenomena.
Taking these considerations into account, the main objective of this study is to analyze
the effects of the relative use of individuals’skills in the workplace on wages and on job
satisfaction for the Spanish case. Besides the negative effects of labor mismatch on
individuals’well-being (whether through wages or through job satisfaction), the interest of
analyzing these two labor market outcomes lies in the fact that these negative effects may
spread to the firm and to the economy as a whole; in fact, several works point out that lower
pay or lower levels of job satisfaction may lead to lower productivity at aggregate levels
(Lazear, 2000; Böckerman and Ilmakunnas, 2012). Moreover, a distinction is made between
educational mismatch and skills-related measures of mismatch, with the focus placed on the
usage that the individuals do of their skills in the workplace. Variables of skills utilization
and relative use of skills are derived following different approaches applied to the PIAAC
data for the case of Spain, with a sample of more than 2,400 employees (males and females),
working either in the public or the private sectors, and aged between 16 and 65 years.
By focusing on skills actually achieved rather than on education, indicators of skills abstract
from issues of differences in innate abilities or how those skills were acquired and allow one
to take account of skill heterogeneity among workers and jobs. Furthermore, the distinction
between educational mismatch and skills utilization allows one to better understand
whether these forms of labor mismatches reflect different phenomena, which can, in turn,
contribute to a better understanding of the channels behind the negative effects of labor
mismatches on different labor market outcomes.
The rest of the paper is structured as follows. Section 2 offers a brief review of works
analyzing the effects of labor mismatches on wages and on job satisfaction. Section 3
focuses on the definition of the variables of skill utilization in the workplace and the extent
of the relative use that the individuals do of their skills. The next two sections are devoted to
analyze the influence of the relative use of skills in the workplace on wages (Section 4) and
on job satisfaction (Section 5). Finally, the paper closes with a discussion of the main results
found in this study.
2. Literature review: effects of labor mismatches on wages and job satisfaction
A lot of work on thewage effects of labor mismatcheshas been carried out in the lastdecades,
most of it focusing on educational mismatch andfewer, and more recently, on skill mismatch.
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Skills use in
the workplace
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