Job Employment and Vertical Mismatch: Evidence From Thailand

ABSTRACT The augmented matching function is modified to identify the determinants of job employment and the pattern of vertical mismatch in Thailand's labour market during 2017–2022. Specifically, using the General Method of Moments technique, the results show that job employment in each skill group is positively affected by its own lagged variable, the number of unemployed workers and job vacancies but negatively influenced by the congestion externalities of job vacancies in other skill groups. In terms of elasticity, the elasticity of job employment with respect to unemployment and job vacancies is around 0.36–0.46 and 0.31–0.43, respectively. Furthermore, overskilling is observed in both semi‐skilled and low‐skilled positions, while underskilling occurs only in semi‐skilled positions regarding the coefficient values for the congestion of job vacancies. Finally, the provision of more job‐matching platforms and upskilling courses is suggested as a policy recommendation to mitigate the problems of overskilling and underskilling, respectively.