Future of work

This paper examines the evolution of the demand for skilled labour due to technological change and changing trends in Canada’s labour market. Overall change in employment is decomposed into a skill substitution effect, a productivity lag effect, and an output effect. The skill substitution effect is that technological innovation leads to demand for higher-skilled workers; Productivity lag effects suggests that differing growth rates across industries determine the distribution of indemand skills; and, the output effect refers to the changing demand in skills due to demand for Canadian-produced goods and services. They find that the skill substitution effect dominates the other two effects in driving the structural changes in skills demanded in Canada. Likewise, the substitution effect appears to be gaining in importance over time.

Relatedly, the report demonstrates that knowledge and management occupations have significantly increased leading to increased demand for cognitive and communication skills, which in turn has led to an increase in the demand for higher education and literacy.

Despite the increase in demand for skilled labour, there was no significant evidence of skill shortages in the Canadian economy. The increase in demand for skilled labour has been met by an equal increase in supply of highly skilled workers. Furthermore, there is no significant evidence of job deterioration for low skilled workers.