Thepthida Sopraseuth, together with Pietro Garibaldi and Pedro Gomes, has recently published in open access her new research on vertical mismatch in Quantitative Economics. Vertical mismatch occurs when high-skilled workers are employed in unskilled tasks and low-skilled workers in skilled tasks. Using a neoclassical model calibrated on the U.S. economy, the authors show that changes in educational mismatch explain roughly one-sixth of the rise in the college wage premium, relative to the role of skill-biased technological change.

They also find that mismatch frictions reduce output by an average of 0.26%, with differences across states driven mainly by the wage gap between mismatched and well-matched workers rather than by the share of mismatched workers. These findings shed new light on the sources of wage inequality and suggest that reducing the frictions that create mismatch would mitigate these disparities.