No Longer Qualified? Changes in the Supply and Demand for Skills within Occupations

Although labor market mismatch often refers to imbalances between supply and demand across occupations, mismatch within occupations can arise when skill requirements change rapidly, with important consequences for workers and the labor market. Using 200 million US online job postings, the authors show educational upskilling varied considerably by occupation during the Great Recession, persisted well beyond the initial recovery, and was correlated with rising demand for software skills. Developing an adjusted mismatch index, they demonstrate how the educational composition of vacancies becomes misaligned with that of unemployed workers within occupations, decreasing aggregate matching efficiency. Among occupations with persistent educational upskilling, the authors document lower job-finding rates for noncollege workers, suggesting rapidly changing educational requirements create a moving target for unemployed workers. Although they do not examine non-educational upskilling, the findings help reconcile prior studies showing little evidence of labor market mismatch with employer reports of skilled worker shortages after the Great Recession.