OECD Education Working Papers, No. 63 The focus of this study is on the potential causes of skill mismatch, the extent of skill mismatch, and the consequences of skill mismatch in terms of earnings as well as employer sponsored adult training. A distinction is made between skill mismatch and education mismatch. The analysis is based on the 2003-2007 Adult Literacy and Lifeskills Survey. The analysis points to the complex ways in which mismatch is generated and the need for an accurate and up to date measure of mismatch, one that reflects the possibilities for skill gain and skill loss over the lifespan. Two key findings stand out. First, including supply and demand characteristics in an earnings function reveals that labour demand characteristics are more important than labour supply characteristics in explaining earnings differentials. In other words, skills matter for earnings but only if they are required by the job. Second, the skill content of jobs seems to be an even stronger determinant of participation in employer supported adult education/training than educational attainment or literacy proficiency. The influence of demand characteristics thus tends to outweigh the influence of supply characteristics when employers make the decision to support adult education/training. Addressing mismatch thus requires a careful consideration of both the demand and supply sides of the labour market, so as to understand better the variety of factors which may have a negative impact on the effectiveness of skill formation, skill maintenance, and skill use.