Wages and labour mismatch in Italy: An investigation with PIAAC data

This paper provides new evidence on the returns to education and ability in Italy by employing the two cycles (2011 and 2022) of the International Assessment of Adult Competencies (PIAAC) Survey of Adult Skills. We employ Mincer-type equations to quantify the impact of required education, overeducation and undereducation (expressed in number of years) on Italian employees’ wages. We also estimate the impact of both overskilling and underskilling (in the form of dummy variables) on wages. Our results show that returns to required and surplus education are positive and significant in all our model specifications, while returns to deficit education are significantly negative. As for over- and under-skilling, we find a wage premium for overskilled workers and no penalty for underskilled ones.