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The value of basic skills in the British labour market

  • Anna Vignoles
  • Augustin De Coulon
  • Oscar Marcenaro-Gutierrez

We evaluate the labour market value of literacy and numeracy in the UK, focusing on the impact of basic skills on wages. We draw on literacy and numeracy tests undertaken by all members of the UK 1970 British Cohort Study, and on earlier test score information collected during childhood. The data used are rich and allow us to account for potential ability bias. We find literacy and numeracy skills are positively associated with earnings, over and above any general effect on earnings from a person being more cognitively able and indeed over and above the effect of education on earnings. We also assess whether the wage return to skills has increased over time, using a cross cohort analysis. Literacy and numeracy skills have retained their high value in the UK labour market over the period 1995--2004, despite numerous policy attempts to increase the supply of skills during this period. Copyright 2011 Oxford University Press 2010 All rights reserved, Oxford University Press.

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Article provided by Oxford University Press in its journal Oxford Economic Papers.

Volume (Year): 63 (2011)
Issue (Month): 1 (January)
Pages: 27-48

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Handle: RePEc:oup:oxecpp:v:63:y:2011:i:1:p:27-48
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  1. F Green & Steven McIntosh & Anna Vignoles, 1999. "Overeducation and Skills - Clarifying the Concepts," CEP Discussion Papers dp0435, Centre for Economic Performance, LSE.
  2. Joshua Angrist & Alan Krueger, 1998. "Empirical Strategies in Labor Economics," Working Papers 780, Princeton University, Department of Economics, Industrial Relations Section..
  3. 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.
  4. Lorraine Dearden, 1998. "Ability, families, education and earnings in Britain," IFS Working Papers W98/14, Institute for Fiscal Studies.
  5. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1, December.
  6. Lorraine Dearden & Steven McIntosh & Michal Myck & Anna Vignoles, 2000. "The Returns to Academic and Vocational Qualifications in Britain," CEE Discussion Papers 0004, Centre for the Economics of Education, LSE.
  7. Steven McIntosh & Anna Vignoles, 2000. "Measuring and Assessing the Impact of Basic Skills on Labour Market Outcomes," CEE Discussion Papers 0003, Centre for the Economics of Education, LSE.
  8. 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.
  9. Griliches, Zvi, 1977. "Estimating the Returns to Schooling: Some Econometric Problems," Econometrica, Econometric Society, vol. 45(1), pages 1-22, January.
  10. Angrist, J D & Imbens, G W & Krueger, A B, 1999. "Jackknife Instrumental Variables Estimation," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 14(1), pages 57-67, Jan.-Feb..
  11. 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.
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