Finding the perfect job is like finding the perfect partner. There is a need to date around and potential for mismatches. That’s especially true if you’re concerned about income potential. It’s also especially true among employees who can be considered young and eligible for their university educations and skills. Irisa Zhou is not a matchmaker, but the PhD candidate with the Department of Economics studied how individuals learn to navigate mismatches between their education and employment.

Zhou’s job market paper, Learning the Major-Industry Mismatch, uses Canadian administrative data to explore why university graduates with similar majors and skills experience vastly different earnings. Her analysis reveals that unexplained earnings disparities—used as a measure of mismatch—are strongly associated with job instability and industry switching.

“The key variable I focus on is unexplained earnings,” she said. “These are income levels that that can’t be accounted for by observable characteristics.” [Read more…]