Tables have turned: Vertical mismatch across gender

We study gender differences in vertical mismatch and their implications. First, we document facts about underemployment and overemployment and their relative wage penalties by gender, for the US between 1970 and 2022, as well as for a cross-section of US States. In 1970s and 1980s, the underemployment rate and their wage penalty relative to well-matched workers was higher for women. By 2022, both variables were higher for men. Second, we use the data to calibrate a neoclassical model of mismatch and find that frictions that generate mismatch have increased more for men during the last 50 years. Reducing these frictions to the level of women would have large effects in the participation rate of men, their wages, and in overall output. States where the underemployment rates and their wage penalty are higher for men, would see their output rise by 2%. • We document trends in mismatch, wage penalties, and employment by gender. • Men now face greater underemployment and larger associated wage penalties. • A calibrated model quantifies how mismatch frictions shape participation. • Reducing men’s frictions to women’s levels raises output by up to 0.7 percent.