We explore how education, literacy skills and migrant origin affect employment and over‐qualification mismatch, using a simple model of human capital, standard regression methods and data from the OECD Survey of Adult Skills (PIAAC). Sweden is an interesting case, as a compressed wage distribution makes thresholds to enter the labour market high for those with low education and low skills. Skill and education levels are high among the native‐born. At the same time, the high influx of humanitarian and family reunion migrants, who are on average less educated and less skilled than natives, increases the supply of low‐skilled labour. We find that substantial employment penalties all but disappear when controlling for migrants’ lower literacy proficiency. In contrast, the high incidence of over‐qualification mismatch among immigrants is little sensitive to literacy proficiency and demographic profiles. However, having participated in education and training activities in Sweden improves matching considerably, in particular if such activities are manifested in formal qualifications.
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Policies that reduce these "child penalties" for women are likely to reduce the gender gap. Such policies could, for example, include making parental leave less generous (thereby lowering employers' expectations of career disruptions) or equalising (expected) parental leave between men and women by dividing these rights more equally between the parents. The above items do not necessarily represent policy recommendations as income distribution goals must be weighed against other objectives relating to, for example, incentives for innovation, entrepreneurship and (human and real) capital investment, employment and fiscal sustainability. But the options should be considered if one wants to put more emphasis on equity goals than has been the case recently.
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