Job-Skill Match in the Labor Market for Scientists and Its Aggregate Implications

This paper offers a transparent approach that demands relatively little from the data and yet produces reliable estimates of the output gain due to job-skill match in the labor market. We apply this approach to data containing information on job choices of scientists in the U.S. The results suggest that for all major skill types/industries, job-skill match creates larger value as opposed to skill mismatch. At the same time, the estimated match surplus responds differently to economic conditions across industries. This difference is useful for uncovering important industry specific traits, including an industry's propensity toward diversification and innovation. In addition, we investigate the relationship between the output gained due to a skill match and innovation at an aggregate level. We find that an increase in a market index of output surplus generated by the skill match increases research output in the economy, as measured by total patent applications. This points to a channel through which the effects of job-skill match could show up in the form of higher productivity