Abstract

International migration remains a significant global phenomenon today. The globalization of labor markets has notably increased the movement of workers across borders, especially from developing to developed regions. Indonesia, with its sizable labor force, has witnessed a rising number of its populations seeking employment opportunities abroad in pursuit of better economic prospects. However, the phenomenon of education-job mismatch—where workers' educational qualifications do not align with job requirements—poses a critical challenge. Such mismatches can result in various inefficiencies, including extended periods before workers break even on their recruitment costs due to higher turnover rates, increased training needs, and prolonged job search periods. Addressing this issue is crucial in aligning with the SDGs' agenda to reduce inequality within and among countries.

This study investigates the relationship between education-job mismatch and the Recruitment Cost Index (RCI) for Indonesian migrant workers. By focusing on the disparities between educational qualifications and job requirements, the research aims to elucidate how these mismatches impact the time needed for migrant workers to break even on their recruitment costs. Utilizing data from the 2023 Indonesia National Labor Force Survey (NLFS), this study employs a regression model to analyze the extent of overeducation and undereducation among Indonesian migrant workers and its subsequent effect on their RCI. Our findings reveal that higher education levels often correlate with increased instances of overeducation, particularly among those employed in small firms and sectors such as trade, transport, and hospitality. Furthermore, the study highlights that a lack of transparency in recognizing foreign credentials and employer discrimination exacerbates these mismatches, prolonging the period required for workers to recoup their recruitment investments. This research contributes to a deeper understanding of the financial implications of skill mismatches and provides critical insights for policymakers aiming to enhance the integration and financial stability of Indonesian migrant workers through improved recognition of qualifications and equitable hiring practices.