The Problem With Interim Employment

This paper examines why unemployed skilled workers are reluctant to accept interim unskilled jobs. We develop a bilateral search model in which workers face a job change cost and firms incur a hiring cost for each vacancy filled. The outcome of the bilateral search displays mismatching where skilled workers are matched with unskilled jobs. The extent of mismatching, however, is limited. We find that there exists a critical skill level where workers who possess skill in excess of this value are over-qualified and are not hired for interim unskilled jobs.