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The Value of Basic Skills in the British Labour Market

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  • Oscar Marcenaro Gutierrez
  • Anna Vignoles
  • Augustin de Coulon

Abstract

In this paper we evaluate the labour market value of basic skills in the UK, focusing on the wage and employment returns to having better literacy and numeracy skills. We draw on literacy and numeracy assessments undertaken by all cohort members of the UK 1970 British Cohort Study. The data used are very rich and allow us to account for potential ability bias, including as they do early childhood assessments of ability. We find that the literacy and numeracy effects on earnings are over and above any general effect on earnings from a person being more cognitively able. We also assess whether the value of basic skills, in terms of wage returns, has increased over time, using a cross cohort analysis based on the 1958 National Child Development Study cohort and the 1970 British Cohort Study. Our results show that literacy and numeracy skills retained their high value in the labour market over the period 1995-2004, despite numerous policy attempts to increase the supply of basic skills during this period.

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Bibliographic Info

Paper provided by Centre for the Economics of Education, LSE in its series CEE Discussion Papers with number 0077.

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Date of creation: May 2007
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Handle: RePEc:cep:ceedps:0077

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Web page: http://cee.lse.ac.uk/publications.htm

Related research

Keywords: Skills; Labour Market; Literacy; Numeracy;

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References

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  1. McIntosh, Steven & Vignoles, Anna, 2001. "Measuring and Assessing the Impact of Basic Skills on Labour Market Outcomes," Oxford Economic Papers, Oxford University Press, vol. 53(3), pages 453-81, July.
  2. Kevin Denny & Colm Harmon & Vincent O'Sullivan, 2004. "Education, earnings and skills: a multi-country comparison," IFS Working Papers W04/08, Institute for Fiscal Studies.
  3. Lorraine Dearden, 1998. "Ability, families, education and earnings in Britain," IFS Working Papers W98/14, Institute for Fiscal Studies.
  4. Joshua Angrist & Alan Krueger, 1998. "Empirical Strategies in Labor Economics," Working Papers 780, Princeton University, Department of Economics, Industrial Relations Section..
  5. Dearden, Lorraine, et al, 2002. "The Returns to Academic and Vocational Qualifications in Britain," Bulletin of Economic Research, Wiley Blackwell, vol. 54(3), pages 249-74, July.
  6. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1.
  7. Joshua D. Angrist & Guido W. Imbens & Alan Krueger, 1995. "Jackknife Instrumental Variables Estimation," NBER Technical Working Papers 0172, National Bureau of Economic Research, Inc.
  8. Behrman, Jere R & Rosenzweig, Mark R & Taubman, Paul, 1994. "Endowments and the Allocation of Schooling in the Family and in the Marriage Market: The Twins Experiment," Journal of Political Economy, University of Chicago Press, vol. 102(6), pages 1131-74, December.
  9. F Green & Steven McIntosh & Anna Vignoles, 1999. "Overeducation and Skills - Clarifying the Concepts," CEP Discussion Papers dp0435, Centre for Economic Performance, LSE.
  10. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters, in: Schooling, Experience, and Earnings, pages 1-4 National Bureau of Economic Research, Inc.
  11. Griliches, Zvi, 1977. "Estimating the Returns to Schooling: Some Econometric Problems," Econometrica, Econometric Society, vol. 45(1), pages 1-22, January.
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Citations

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Cited by:
  1. Isphording, Ingo E., 2013. "Disadvantages of Linguistic Origin: Evidence from Immigrant Literacy Scores," IZA Discussion Papers 7360, Institute for the Study of Labor (IZA).
  2. Antoni, Manfred & Heineck, Guido, 2012. "Do literacy and numeracy pay off? On the relationship between basic skills and earnings," BERG Working Paper Series 86, Bamberg University, Bamberg Economic Research Group.
  3. Derek Bosworth & Genna Kik, 2010. "Adult training policy with respect to basic skills: economic and social issues," Investigaciones de Economía de la Educación volume 5, in: María Jesús Mancebón-Torrubia & Domingo P. Ximénez-de-Embún & José María Gómez-Sancho & Greg (ed.), Investigaciones de Economía de la Educación 5, edition 1, volume 5, chapter 26, pages 499-524 Asociación de Economía de la Educación.
  4. Kelly, Elish & McGuinness, Seamus & O'Connell, Philip J., 2012. "Literacy, Numeracy and Activation among the Unemployed," Research Series, Economic and Social Research Institute (ESRI), number RS25, September.
  5. Kelly, Elish & McGuinness, Seamus & O'Connell, Philip J., 2012. "Literacy and Numeracy Difficulties in the Irish Workplace: Impact on Earnings and Training Expenditures," Research Series, Economic and Social Research Institute (ESRI), number RS27, September.
  6. Anna Vignoles & Augustin de Coulon, 2008. "An Analysis of the Benefit of NVQ2 Qualifications Acquired at Age 26-34," CEE Discussion Papers 0106, Centre for the Economics of Education, LSE.

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