Applied Research Bulletin - Volume 5, Number 1 (Summer 1999)

Work, Literacy Skills and Schooling

Why do some workers accept jobs that require lower levels of education than they have acquired? Some economists have argued that this may be due to modern-day jobs demanding an upgrading of skills, possibly as a result of technological innovation.

A recent study for the Applied Research Branch by Daniel Boothby shows that workers with a post-secondary education who take jobs that normally require less than their level of education tend to have lower functional literacy skills than workers with the same educational level who work at higher level jobs. Earnings also tend to be lower than those of post-secondary graduates who work in occupations which require post-secondary schooling.

Data from the International Adult Literacy Survey (IALS) show that most Canadian post-secondary graduates have high levels of literacy skills. However, 17 percent of them, predominantly non-university post-secondary graduates, have low levels of literacy skills (level 1 or 2 on the IALS scale). In Canada, 80 percent of university graduates and 60 percent of all post-secondary graduates work in skilled information occupations (see graphic, next page), compared to 25 percent of high school graduates.

Postsecondary graduates with a low level of literacy have a much higher probability of working outside the skilled information sector of the economy than other post-secondary graduates. For example, estimates suggest that the probability of working outside the skilled information sector is 86 percent for a 30-year-old man with a Bachelor of Arts degree and with IALS level 2 in prose and document literacy. If the same man had prose and document literacy levels of 4 or 5 (the highest), this probability falls to 10 percent.

Boothby concentrates his study on the largest sector of employment for post-secondary graduates—skilled information workers. He finds that earnings are much lower for post-secondary graduates working outside the skilled information sector than for those working in this sector.

Boothby defines occupational mismatch as post-secondary graduates working outside the skilled information sector. He finds that the proportion of mismatch is much higher among the small group of Canadian post-secondary graduates with low levels of literacy skills than among those with appropriate levels of literacy skills. Moreover, mismatched post-secondary graduates tend to earn less than other post-secondary graduates. Other research has shown that the same situation occurs in the United States. Exceptions may exist for individual workers, but the study shows that workers generally get the jobs that they can do, and this is usually reflected in their wages.

The author performs a multivariate logit analysis of mismatch. It shows that mismatch is also associated with characteristics other than low literacy levels. In particular mismatch is less prevalent among workers 45 to 54 years old than among workers 35 to 44 years old, and among workers 35 to 44 years old than among workers 25 to 34 years old. It is also less prevalent among workers with a degree higher than a BA than among those with a BA.


Occupational Groupings Based on Knowledge Content of Work
Service Sector (13% of Employment)
Goods Sector (31% of Employment):
Skilled Goods Workers E.g. patternmakers, other craftspeople High degree of knowledge in the production of goods	Other Goods Workers E.g. motor vehicle fabricators, other operatives
Information Sector (56% of Employment):
Skilled Information Workers Managers Highest level of communications, authority/ management skills Second level of cognitive skills Knowledge Workers Second level of communications, authority/ management skills Highest level of cognitive skills Data Workers High degree of skills in the production or application of knowledge and information The smallest category of Skilled Information Workers	Data Manipulation Workers E.g. clerks Manipulate information in a routine

Canadian Workforce By Occupational Category, 1994


Sources:	Applied Research Branch classification system validated and scored using the Canadian Classification Dictionary of Occupations; computations for the graph are from the International Adult Literacy Survey for Canada, 1996.

There are several possible explanations of the effects of age on occupational mismatch. One is that the match between qualifications and job requirements improves as university graduates age, either because they acquire additional skills, or because longer periods allow better matching. A second is that older age cohorts faced labour markets which were more favourable for workers with university degrees. A third is that upgrading of the skills required in occupations outside the skilled information sector may also have played a role. A fourth possibility is that university graduates in older age cohorts had higher levels of qualifications. Boothby found indicators that mismatch between educational qualifications and job requirements increased for Canadian university graduates between 1981 and 1991. This parallels the findings of studies in the United States.

Why has mismatch increased in Canada? The evidence examined did not support explanations of increased mismatch as a result of declining skills of university graduates or as a result of increased substitution of graduates to other levels of schooling in skilled information occupations. The likeliest explanation of increased mismatch for university graduates between 1981 and 1991 is that the number of university graduates grew more rapidly than the level of paid employment in skilled information occupations.

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