Skill Mismatch of Indigenous Peoples in Canada: Findings from PIAAC

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