Overeducation and overskilling in Latin America: Evidence from PIAAC

Occupational mismatch is a highly debated phenomenon in developed countries, but rarely addressed in developing economies. This study investigates the magnitudes of overeducation and overskilling in four Latin American countries in which tertiary education has expanded rapidly (i.e. Chile, Ecuador, Mexico and Peru). Using objective and subjective measures derived from PIAAC, we find that overeducation affects between 29% and 43% of the workforce and has a regressive nature. Overskilling is significantly lower than overeducation in Peru and Ecuador, and this can be related to more years of education failing to translate into more skills. Overskilling is higher in the OECD than in Latin America, and differences measured using subjective indicators are not related to additional basic skill attainment of OECD workers. This indicates that workers’ perceptions about how their skills compare against the performed tasks involve abilities additional to the basic skills considered in the objective indicators.