OPTIMAL MISMATCH AND PROMOTIONS

Seeming 'mismatches' in which workers are either under- or overqualifi ed, are shown to be optimal. from the firm's point of view, although t urnover will be positively related to overqualification, training cost s will be inversely related to overqualification. Further overqualifie d workers constitute a pool from which promotions are made. Workers en ter seeming mismatches due to search and mobility costs and because of opportunities for promotion. Estimates using a unique data set indica te that workers who are overqualified at hire receive less training an d move promotions, and that workers overqualified for their current jo b ave move likely to quit.