Labor Market Implications of Skill Mismatches and Non-Labor Income in Georgia

Unemployment in Georgia remains structurally high, reflecting persistent skill mismatches and weak work incentives amid low wages and widespread reliance on remittances and social transfers. This paper finds that over‑education remains pervasive due to limited availability of productive jobs, alongside shortages in technical and job‑relevant skills stemming from weak links between education and labor demand. Remittances and social transfers are estimated to reduce aggregate employment by about 2¼ percentage points. Addressing these challenges requires coordinated education reform, sectoral upgrading, employer‑led training, and more effective employment services and social assistance policies.