This report focuses on skills and how they are measured amongst the working-age population. It begins by providing an overview of the literature on ‘skill mismatch’ in the labour market, i.e. the gap between workers’ actual skills and the skills required by firms. Possible sources of skills mismatch and existing approaches to quantifying it are described. In particular, we discuss country-level indicators of skills mismatch derived from the OECD’s Programme for the International Assessment of Adult Competencies (PIAAC) by combining employees’ subjective views on the mismatch between their job and their skills with measures of their general skills in maths, reading and problem-solving based on actual tests.
To better understand the informational content of the measures of numeracy and literacy available in PIAAC and used to construct some of the key indicators of skills mismatch, the report then examines their relationship with individuals’ qualification levels and labour market performance. It shows that initial education has a positive and lasting impact on adults’ maths and reading skills as measured in PIAAC. This impact is observed among adults who are around 45 years old and who have therefore completed their initial education more than twenty years ago. It is identified on the basis of a major reform of compulsory education in Belgium.
Finally, the study shows that maths and reading skills are only weakly linked to individuals’ labour market outcomes. For example, these skills account for no more than 4 per cent of the variance in wages. By comparison, initial education appears to be a far better indicator of individuals’ employment status and wages. Taken together, our results suggest that initial education enables people to acquire not only the general maths and reading skills measured in PIAAC, but also many others. Consequently, qualifications provide more information about adults’ skills than a few selected measures of general skills, and are therefore better able to predict individuals’ performance in the labour market.
