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The Importance of Functional Literacy: Reading and Math Skills and Labour Market Outcomes of High School Drop-outs

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Author Info

  • Finnie, Ross
  • Meng, Ronald

Abstract

This study assesses the effects of literacy and numeracy skills on the labour market outcomes of Canadian high school drop-outs. We find that these skills have significant effects on the probability of being employed and on hours and weeks of work for both men and women, and also have strong (direct) influences on men's, but not women's, incomes. These findings imply that high school curricula that develop literacy and numeracy skills could provide significant returns even for those who do not complete their programs and wind up at the lower end of the labour market. Our findings similarly suggest that training programs catering to drop-outs could substantially improve these individuals' labour market outcomes by developing these basic skills. The results also have implications for dual labour market theory, since it is often assumed that the secondary market is characterized by minimal returns to human capital'contrary to what is found here.

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Bibliographic Info

Paper provided by Statistics Canada, Analytical Studies Branch in its series Analytical Studies Branch Research Paper Series with number 2006275e.

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Date of creation: 27 Mar 2006
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Handle: RePEc:stc:stcp3e:2006275e

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Related research

Keywords: Education; training and learning; Employment and unemployment; Household; family and personal income; Income; pensions; spending and wealth; Job training and educational attainment; Labour; Literacy; Outcomes of education;

This paper has been announced in the following NEP Reports:

References

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  1. Richard J. Murnane & John B. Willett & Frank Levy, 1995. "The Growing Importance of Cognitive Skills in Wage Determination," NBER Working Papers 5076, National Bureau of Economic Research, Inc.
  2. Gang, Ira & Zimmermann, Klaus F, 1996. "Is Child Like Parent? Educational Attainment and Ethnic Origin," CEPR Discussion Papers 1461, C.E.P.R. Discussion Papers.
  3. George J. Borjas, 1994. "Long-run convergence of ethnic skill differentials: The children and grandchildren of the Great Migration," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 47(4), pages 553-573, July.
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  5. George J. Borjas, 1994. "Long-Run Convergence of Ethnic Skill Differentials," NBER Working Papers 4641, National Bureau of Economic Research, Inc.
  6. Arthur Sweetman & Gordon Dicks, 1999. "Education and Ethnicity in Canada: An Intergenerational Perspective," Journal of Human Resources, University of Wisconsin Press, vol. 34(4), pages 668-696.
  7. Louis Christofides, 1999. "Social Assistance and Labour Supply," CESifo Working Paper Series 225, CESifo Group Munich.
  8. Rivera-Batiz, Francisco L., 1990. "Literacy skills and the wages of young black and white males in the U.S," Economics Letters, Elsevier, vol. 32(4), pages 377-382, April.
  9. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863 Elsevier.
  10. Francisco L. Rivera-Batiz, 1992. "Quantitative Literacy and the Likelihood of Employment among Young Adults in the United States," Journal of Human Resources, University of Wisconsin Press, vol. 27(2), pages 313-328.
  11. Chiswick, Barry R, 1988. "Differences in Education and Earnings across Racial and Ethnic Groups: Tastes, Discrimination, and Investments in Child Quality," The Quarterly Journal of Economics, MIT Press, vol. 103(3), pages 571-97, August.
  12. Neal, Derek A & Johnson, William R, 1996. "The Role of Premarket Factors in Black-White Wage Differences," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 869-95, October.
  13. Rivera-Batiz, Francisco L., 1990. "English language proficiency and the economic progress of immigrants," Economics Letters, Elsevier, vol. 34(3), pages 295-300, November.
  14. David A Green & W Craig Riddell, . "Literacy, Numeracy and Labour Market Outcomes in Canada," Canadian International Labour Network Working Papers 47, McMaster University.
  15. Green, David A & Riddell, W Craig, 1997. "Qualifying for Unemployment Insurance: An Empirical Analysis," Economic Journal, Royal Economic Society, vol. 107(440), pages 67-84, January.
  16. Ross Finnie, 2002. "Minorities, Cognitive Skills and Incomes of Canadians," Canadian Public Policy, University of Toronto Press, vol. 28(2), pages 257-273, June.
  17. Charette, Michael & Meng, Ronald, 1994. "Explaining language proficiency : Objective versus self-assessed measures of literacy," Economics Letters, Elsevier, vol. 44(3), pages 313-321.
  18. John M. Abowd & Henry S. Farber, 1982. "Job queues and the union status of workers," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 35(3), pages 354-367, April.
  19. Peter George & Peter Kuhn, 1994. "The Size and Structure of Native-White Wage Differentials in Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 27(1), pages 20-42, February.
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