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Literacy, Numeracy and Labour Market Outcomes in Canada

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  • David A Green
  • W Craig Riddell

Abstract

Most research on the contribution of human capital to economic growth and its role in the distribution of income uses indirect measures of human capital such as educational attainment and work experience. Such measures are arguably inputs into the production of human capital in the form of skills, competencies and knowledge. This study uses Canadian data from the international Adult Literacy Survey to analyse the role of directly observed skills -- specifically, prose, document and quantitative literacy -- on individual labour market earnings. The contributions of unobserved skills are taken into account using input measures (education and experience). We find that literacy skills have a large and statistically significant causal effect on earnings. As much as one-third of the return to education may be due to the combined effects of education on literacy and of literacy skills on earnings. In contrast, very little of the return to labour market experience is associated with the combined effects of experience on literacy and literacy skills on earnings.

Suggested Citation

  • David A Green & W Craig Riddell, "undated". "Literacy, Numeracy and Labour Market Outcomes in Canada," Canadian International Labour Network Working Papers 47, McMaster University.
    • Handle: RePEc:mcm:cilnwp:47
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    Cited by:

    1. Per-Anders Edin & Magnus Gustavsson, 2008. "Time Out of Work and Skill Depreciation," ILR Review, Cornell University, ILR School, vol. 61(2), pages 163-180, January.
    2. Jesper Banghøj & Gorm Gabrielsen & Christian Petersen & Thomas Plenborg, 2010. "Determinants of executive compensation in privately held firms," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 50(3), pages 481-510, September.
    3. Ross Finnie, 2002. "Minorities, Cognitive Skills and Incomes of Canadians," Canadian Public Policy, University of Toronto Press, vol. 28(2), pages 257-273, June.
    4. Don Drummond & Evan Capeluck & Matthew Calver, 2015. "The Key Challenge for Canadian Public Policy: Generating Inclusive and Sustainable Economic Growth," CSLS Research Reports 2015-11, Centre for the Study of Living Standards.
    5. Finnie, Ross & Meng, Ronald, 2003. "Minorities, Cognitive Skills and the Incomes of Canadians," Analytical Studies Branch Research Paper Series 2003196e, Statistics Canada, Analytical Studies Branch.
    6. Peter W. Schuhmann & KimMarie McGoldrick & Robert T. Burrus, 2005. "Student Quantitative Literacy: Importance, Measurement, and Correlation with Economic Literacy," The American Economist, Sage Publications, vol. 49(1), pages 49-65, March.
    7. Finnie, Ross & Meng, Ronald, 2006. "The Importance of Functional Literacy: Reading and Math Skills and Labour Market Outcomes of High School Drop-outs," Analytical Studies Branch Research Paper Series 2006275e, Statistics Canada, Analytical Studies Branch.
    8. Gosta Esping-Andersen, 2008. "Childhood investments and skill formation," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 15(1), pages 19-44, February.
    9. Dohmen, Thomas & van Landeghem, Bert, 2019. "Numeracy and Unemployment Duration," IZA Discussion Papers 12531, Institute of Labor Economics (IZA).

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