Skill Mismatch of Indigenous Peoples in Canada : Findings from PIAAC

In the Canadian sample from the Programme for the International Assessment of Adult Competencies (PIAAC), lower scores within occupation groups are more common for Indigenous individuals (not living on reserves) than for non-Indigenous individuals. This may be interpreted as evidence of what economists call “underskilling”, with no implication regarding current job performance, but which has been associated with increased vulnerability to job loss during economic downturns. Estimated underskilling rates are larger for English or French literacy among First Nations men and for numeracy among First Nations women, and for both proficiency domains among Inuit women and men. “Overskilling” is primarily associated with inefficient use of labor resources and reduced welfare. Controlling for demographic characteristics, we find no consistent statistically significant evidence that the odds of being overskilled, that is of having higher scores than those within the same occupation group, are different for Indigenous individuals as compared to the non-Indigenous. In estimated wage equations, wage differences shrink when our overskilling/underskilling estimates are added to the controls, but First Nations differences remain negative and significant, particularly for men