Labour Market Matters - October 2013

Literacy is central to the improvement and betterment of any society. Individuals cannot fully engage in social and political discourse, and are more likely to become less-than-equals in society without basic literacy to pursue their goals. On the individual level, more literate individuals tend to enjoy better employment opportunities and higher earnings – leading to a better quality of life. On a societal level, a more literate workforce may be better positioned to adjust to change and to adopt new technologies. Thus, improving literacy for individuals may have spill-over effects that benefit the economy as a whole. As many industrialized countries are facing significant population ageing in the coming decades, what are the implications for literacy skills? A paper entitled “Ageing and Literacy Skills: Evidence from Canada, Norway and the United States†(CLSRN Working Paper no. 98) by CLSRN affiliates David A. Green and W. Craig Riddell (both of the University of British Columbia) studies the relationship between age and literacy skills using data from the 1994 International Adult Literacy Survey (IALS) and the 2003 International Adult Literacy and Life Skills Survey (IALSS). Canada, as many other advanced economies is projected to face a significant “greying†of its population in the coming decades due to factors such as the ageing of the baby boomers and low-birth rates. What impact will population ageing have on the Labour Market? A study entitled “Inter-temporal and Inter-industry Effects of Population Ageing: A General Equilibrium Assessment for Canada†by CLSRN Affiliates Nabil Annabi, Maxime Fougère, and Simon Harvey (all of Human Resources and Skills Development Canada, HRSDC) find that the projected decline in the growth of the labour force would raise pressures on labour markets leading to an increase in wages and to an unprecedented decline in unemployment. However, the authors show that the impact would vary at the industrial and occupational levels causing significant distributional effects. The authors also suggest that investment in capital and labour quality would become more important than labour quantity in the determination of productivity.