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The effects of adult literacy on earnings and employment

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  • Ponczek, Vladimir
  • Rocha, Maúna Baldini

Abstract

This paper provides evidence of the effects of adult literacy on individuals' income and employability in Brazil based on information obtained from the monthly employment survey (PME). The OLS results indicate that after controlling for observable characteristics, there is a 21.25% increase in wages for individuals who become literate; however, there is no significant impact on employability. Moreover, the findings show an 8.1% increase in the probability of being employed in the formal sector. We also explore the longitudinal structure of the dataset to control for unobservable fixed characteristics of individuals. The fixed-effects estimators show smaller effects compared to the OLS estimators. We find that literacy has a 4.4% effect on wages and a 4.3% impact on the probability of being formally employed. The effects are significantly different from zero.

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Bibliographic Info

Paper provided by Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil) in its series Textos para discussão with number 285.

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Date of creation: 12 Sep 2012
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Handle: RePEc:fgv:eesptd:285

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  1. David Card, 1994. "Earnings, Schooling, and Ability Revisited," Working Papers 710, Princeton University, Department of Economics, Industrial Relations Section..
  2. Green, David A. & Craig Riddell, W., 2003. "Literacy and earnings: an investigation of the interaction of cognitive and unobserved skills in earnings generation," Labour Economics, Elsevier, vol. 10(2), pages 165-184, April.
  3. Psacharopoulos, George & Patrinos, Harry Anthony, 2002. "Returns to investment in education : a further update," Policy Research Working Paper Series 2881, The World Bank.
  4. Murnane, Richard J & Willett, John B & Levy, Frank, 1995. "The Growing Importance of Cognitive Skills in Wage Determination," The Review of Economics and Statistics, MIT Press, vol. 77(2), pages 251-66, May.
  5. Dougherty, Christopher, 2003. "Numeracy, literacy and earnings: evidence from the National Longitudinal Survey of Youth," Economics of Education Review, Elsevier, vol. 22(5), pages 511-521, October.
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  7. Psacharopoulos, George & Velez, Eduardo, 1994. "Education and the labor market in Uruguay," Economics of Education Review, Elsevier, vol. 13(1), pages 19-27, March.
  8. Niels-Hugo, Blunch & Verner, Dorte, 2000. "Is Functional Literacy a Prerequisite for Entering the Labor Market? An Analysis of the Determinants of Adult Literacy and Earnings in Ghana," CLS Working Papers 00-5, University of Aarhus, Aarhus School of Business, Centre for Labour Market and Social Research.
  9. McKinley L. Blackburn & David Neumark, 1993. "Are OLS Estimates of the Return to Schooling Biased Downward? Another Look," NBER Working Papers 4259, National Bureau of Economic Research, Inc.
  10. Fernando Botelho & Vladimir Ponczek, 2006. "Segmentation In The Brazilian Labor Market," Anais do XXXIV Encontro Nacional de Economia [Proceedings of the 34th Brazilian Economics Meeting] 20, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
  11. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1.
  12. Repetto, Gaston & Chiswick, Barry R., 2000. "Immigrant Adjustment in Israel: Literacy and Fluency in Hebrew and Earnings," IZA Discussion Papers 177, Institute for the Study of Labor (IZA).
  13. Ashenfelter, Orley & Card, David, 1985. "Using the Longitudinal Structure of Earnings to Estimate the Effect of Training Programs," The Review of Economics and Statistics, MIT Press, vol. 67(4), pages 648-60, November.
  14. Joshua Angrist, 2004. "Treatment Effect Heterogeneity in Theory and Practice," Econometric Society 2004 North American Winter Meetings 186, Econometric Society.
  15. 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.
  16. Psacharopoulos, George, 1994. "Returns to investment in education: A global update," World Development, Elsevier, vol. 22(9), pages 1325-1343, September.
  17. Blunch, Niels-Hugo & Verner, Dorte, 2000. "Is functional literacy a prerequisite for entering the labor market? An analysis of determinants of adults literacy and earnings in Ghana," Policy Research Working Paper Series 2410, The World Bank.
  18. Reynaldo Fernandes & Francisco Anuatti Neto, 2000. "Grau de Cobertura e Resultados Econômicos do Ensino Supletivo no Brasil," Revista Brasileira de Economia, FGV/EPGE Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil), vol. 54(2), pages 165-187, April.
  19. Psacharopoulos, George & Velez, Eduardo & Patrinos, Harry Anthony, 1994. "Education and earnings in Paraguay," Economics of Education Review, Elsevier, vol. 13(4), pages 321-327.
  20. Bishop, John, 1992. "The impact of academic competencies on wages, unemployment, and job performance," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 37(1), pages 127-194, December.
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