Earnings and “skill” allocation in the Canadian labor market

Using the Survey of Labour and Income Dynamics, the incidence of skills mismatches in the Canadian workforce was found to be about 27 percent. The overeducated (undereducated) were found to earn less (more) than their adequately educated counterparts. The overeducated could realize a wage gain by finding the “right” job, while the undereducated would gain by adjusting their skill level. Based on the Oaxaca decomposition, it was concluded that better skills allocation would help to narrow gender wage differentials.