What predicts skills mismatch in Canada?

Abstract

There is a vast body of literature relating to the causes and economic impacts of skills mismatch. Although skills mismatch has become an important area for research and policy development, the measures that have been used to define the phenomenon vary considerably, both in academic research and government analysis. Consequently, it is challenging to understand and make generalizations about the impact of skills mismatch on individual, firm, and economic productivity. Therefore, this paper develops a potentially informative measure of skills mismatch by utilizing the OECD’s Canadian PIAAC data. Using this measure, the factors that predict under-skilling and over-skilling in employment are estimated using a multinomial logistic regression model. The most significant predictors of skills mismatch in terms of literacy, numeracy, and problem-solving skills are among Canadian immigrants, individuals with higher levels of educational attainment, and individuals with parents or guardians that have higher levels of educational attainment.