Unobserved Productivity and Mismatch: Evidence from the British Cohort Study 1970
This paper examines the intersection of unobserved productivity and mismatch in the British labour market. Using the British Cohort Study 1970 (BCS70) data, individual unobserved heterogeneity is measured by the cognitive and non-cognitive skill test scores throughout childhood. Replicating the identification strategy of Galanakis (2019), I derive the incidence of mismatch for cohort participants. A comparison to earlier estimates follows. Results show that the incidence does not fluctuate significantly over time and increases when accounting for skills of those born in 1970. Evidence suggests that unobserved productivity does not generate mismatch in the market. Finally, I explore the effect of parental background on getting a graduate job. Higher skilled parents increase the probability of being in match. When controlling for skills, the effect shrinks but the pattern persists.