Wage Effect and Workers’ Skill Mismatch: Paths and Mechanisms

Skill mismatch, a manifestation of poor job matching quality, is becoming an essential factor that hinders workers from realizing their productive potential and obtaining reasonable remuneration. This study investigated the internal relation between skill mismatches and wages, including the influencing processes and mechanisms. Findings showed that excessive vertical mismatches and horizontal skill mismatches result in wage losses for workers. Both mismatches affect the final wage level by changing the degree of job negativity. Additionally, excessive vertical skill mismatches mitigate the wage penalty effect by increasing the degree of job control. The possibility of occurrence of both skill mismatch types increases as job competition becomes more intense and job prospects become more promising; taking these factors into account, the degree of wage impact will be weakened. These findings further clarify the relation between skill-matching status and wage return and provide value judgment for increasing workers’ job satisfaction.