Economic conditions, task shares, and overqualification[Changes in unemployment and wage inequality: an alternative theory and some evidence]

This article demonstrates that economic conditions affect job match quality by influencing the task shares of available jobs. Cognitive (reasoning/communication) and physical (sensory/coordination) task shares and education-based overqualification measures are generated from Canada’s Labour Force Survey, the Career Handbook, and the Occupational Information Network database. In unfavourable labour markets, cognitive task intensity decreases and physical task intensity rises. The task content of newly formed jobs is then shown to be an important empirical determinant of overqualification. A calibrated search model that accounts for these findings quantifies the costs of increased overqualification. Each percentage point increase in unemployment raises overqualification by 5.8 percentage points, partly due to changes in task shares. Economic output subsequently decreases by about 0.6%.