Understanding labor market mismatches in Türkiye: evidence from the PIAAC survey

Rapid expansion in educational attainment does not necessarily improve labor market outcomes when education systems fail to keep pace with labor demand. This paper examines education, skill, and field-of-study mismatch and their effects on wages and job satisfaction in a middle-income economy undergoing rapid educational expansion, using nationally representative PIAAC data for Türkiye. We employ both subjective and objective measures to identify mismatches and assess their relationship with wage outcomes and job satisfaction among full-time wage earners. The results show that labor market mismatch is widespread and multidimensional. Overall, 29% of full-time workers are educationally mismatched, while 41% experience skill mismatch. Among tertiary-educated workers, 34% are employed outside their field of study, with substantial overlap across different types of mismatch. Wage regressions reveal sizeable penalties associated with overeducation and overskilling, while required education yields the highest returns. Once educational mismatch is controlled for, field-of-study mismatch is no longer associated with additional wage penalties. In contrast, job satisfaction is positively associated with undereducation and underskilling. By jointly analyzing multiple mismatch dimensions and controlling for cognitive skills, the study contributes new evidence on labor market mismatch in developing and middle-income economies.