Is Entrepreneurship a Way to Escape from Skill Mismatches?

Skill mismatch - the discrepancy between the qualifications and skills that individuals possess and those needed by the labour market- in the EU is increasing. It harms a number of economic labour outcomes as salaries, employment, competitiveness and growth, but also to psychological aspects as job satisfaction, undermining social inclusion and generating significant economic and social costs (Allen et.al., 2001). Europe’s challenge is not to improve skills, but to match the people with the right skills to the jobs available. There may be some advantages to firms employing someone in a job for which they are overeducated, but evidence shows that individuals feel trapped and unsatisfied in lower level jobs. This situation is more common in wage employees than in the self-employment sector (Hessels et. al., 2013; Vieira, 2005; Allen at. al., 2001). Therefore, tackling mismatch through better labour-market information and efficient job placement services should be a priority for policy-makers.

We complement prior research on job satisfaction and skill mismatch by using the eight waves of the European Community Household Panel (ECHP) covering the period 1994–2001, to analyze the impact of the job transition from the private sector to the self-employment. We test whether entrepreneurship is a way to escape from skill mismatch and how this acts as a main mediator to the job satisfaction (Lazear, 2005; Astebro and Thompson, 2011).

The Erasmus - EIM - Panteia Entrepreneurship Lectures Series is co-organised by Erasmus Research Institute of Management and EIM Business & Policy Research, an independent and international research and consultancy organisation, specialised in SMEs and Entrepreneurship. EIM is part of the Panteia group.

• For more research resources visit our Erasmus Centre for Entrepreneurship Research