While in an ideal world the qualification preferences of job seekers and employers would coincide, in reality, this is often not the case. Besides informational asymmetries (job seekers not knowing which qualifications are demanded by employers) the reason is that employers may be in need of qualifications that are not considered attractive by the job seekers. In the country of Georgia, we want to address this problem through a “recommendation system” which will suggest vocational training to job seekers. There are two main problems to be tackled in this project: (1) How can we decide what would be the most useful qualification for a given job seeker, and (2) how can we incentivize the job seekers to follow our recommendations? This policy brief discusses our approach to this problem.

Qualification mismatches are common in many labor markets around the world (see for example, Ghignoni and Verashchagina (2014) for Europe, McGuinness and Sloane (2011) for the UK, and Béduwé and Giret (2011) for France). It is well known that qualification mismatch is a relevant problem also in the country of Georgia, as was shown in various studies (see ISET (2012) and The World Bank (2013)).

The ISET Policy Institute (ISET-PI) was commissioned by the World Bank to assist the Social Service Agency (SSA) of Georgia, an agency of the Ministry of Labor, Health, and Social Affairs, in developing a system that will recommend vocational training to job seekers with the aim to reduce the qualification mismatch in Georgia.

Vocational training addresses the needs of two different groups. It is demanded by job seekers, who want to improve their human capital in a way that matches their preferences and, in the optimal case, maximizes their chances to get back into employment. At the same time, vocational training also addresses the needs of employers, whose businesses may face shortages in qualified personnel.