Are we ready? Labour market transit to the digital economy

Abstract

Industrialised countries are currently facing the knowledge-to-digital economy transition. That transition is strictly defined by how the labour market is organised and operates in the national economy. Some old to new phenomena are determinants of those dimensions, such as educational mismatch, credential inflation, and job polarisation. These phenomena affect the relationship between schooling and earnings, carrying consequences for social mobility, household welfare, and an individual's social progression perspective. Those phenomena remain understudied in the context of Latin America. Chile's case has gained relevance in the region due to the highly deregulated organisation of its educational market, the quality increase in its higher education institutions, and its funding policies for higher education. This work attempts to provide an extended diagnosis of the Chilean labour market, considering the impact of these emerging issues on the educational market and policymaking. The results show that 83.6% of Chilean employees experience an educational mismatch (overeducation and undereducation); credential inflation has depreciated the value of education over five of the six occupational categories – besides the polarisation index for industrialised countries such as the United Kingdom.