Demand-side consequences of unemployment and horizontal skill mismatches across national contexts: An employer-based factorial survey experiment.

With growing flexibilization in the labour market, continuous and consistent career trajectories have become less the norm, and workers facing unemployment may need to look for employment opportunities outside the occupation they are trained in. But what are their employment chances? And what are the chances of returning to the occupation they were trained in after having worked in a different occupation? Despite much research on how employers evaluate job candidates with vertical skill mismatches (e.g. over-qualification and under-qualification) and unemployment, there is little research to investigate how employers view horizontal mismatch in comparison to unemployment, and whether a combination of both generates multiplicative negative effects. Using data gathered from an employer survey experiment in Switzerland and Greece, we find that in Switzerland both unemployment and horizontal mismatch significantly reduce employment chances, but the scarring effect of horizontal mismatch is much stronger. In contrast, in Greece horizontal mismatch significantly reduces employment chances but unemployment does not. Furthermore, we found that horizontal mismatch scarring is significantly stronger in Switzerland than in Greece. These findings suggest that the scarring effects of both unemployment and horizontal mismatch vary across contexts. Further analyses show that, rather than experiencing multiplicative scarring effects, unemployment does not add further disadvantages to mismatched candidates in either country, highlighting the importance of occupational specificity of skills in labour market matching. Overall, these findings facilitate a more nuanced understanding of demand-side labour market processes, highlighting the distinct interactive effects of unemployment and horizontal mismatch across national contexts.