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The value of basic skills in the British labour market

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Listed author(s):
  • Anna Vignoles
  • Augustin De Coulon
  • Oscar Marcenaro-Gutierrez

Abstract

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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File URL: http://hdl.handle.net/10.1093/oep/gpq012
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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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  • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
  • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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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 453-481, July.
  2. Angrist, Joshua D. & Krueger, Alan B., 1999. "Empirical strategies in labor economics," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 23, pages 1277-1366 Elsevier.
  3. F Green & Steven McIntosh & Anna Vignoles, 1999. "Overeducation and Skills - Clarifying the Concepts," CEP Discussion Papers dp0435, Centre for Economic Performance, LSE.
  4. 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.
  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 249-274, July.
  6. Colm Harmon & Kevin Denny & Vincent O'Sullivan, 2003. "Education, earnings and skills : a multi-country comparison," Open Access publications 10197/649, School of Economics, University College Dublin.
  7. 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..
  8. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1, June.
  9. Griliches, Zvi, 1977. "Estimating the Returns to Schooling: Some Econometric Problems," Econometrica, Econometric Society, vol. 45(1), pages 1-22, January.
  10. Lorraine Dearden, 1998. "Ability, families, education and earnings in Britain," IFS Working Papers W98/14, Institute for Fiscal Studies.
  11. 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 1131-1174, December.
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Cited by:

  1. Isphording, Ingo E., 2014. "Disadvantages of linguistic origin—Evidence from immigrant literacy scores," Economics Letters, Elsevier, vol. 123(2), pages 236-239.
  2. José Manuel Cordero Ferrera & Manuel Muñiz Pérez & Rosa Simancas Rodríguez, 2015. "The influence of socioeconomic factors on cognitive and non-cognitive educational outcomes," Investigaciones de Economía de la Educación volume 10,in: Marta Rahona López & Jennifer Graves (ed.), Investigaciones de Economía de la Educación 10, edition 1, volume 10, chapter 21, pages 413-438 Asociación de Economía de la Educación.
  3. Luis Alejandro Lopez-Agudo & Oscar David Marcenaro Gutierrez & Helena Ferreira-Marques, 2016. "Gender, institutions and educational achievement: a cross country comparison," Investigaciones de Economía de la Educación volume 11,in: José Manuel Cordero Ferrera & Rosa Simancas Rodríguez (ed.), Investigaciones de Economía de la Educación 11, edition 1, volume 11, chapter 20, pages 383-400 Asociación de Economía de la Educación.
  4. Anna Vignoles, 2016. "What is the economic value of literacy and numeracy?," IZA World of Labor, Institute for the Study of Labor (IZA), pages 229-229, January.
  5. Mane, Ferran & Miravet, Daniel, 2016. "Using the job requirements approach and matched employer-employee data to investigate the content of individuals' human capital," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 49(2), pages 133-155.
  6. Andrea Cegolon, 2015. "Determinants and Learning Effects of Adult Education-Training: a Cross-National Comparison Using PIAAC Data," DoQSS Working Papers 15-11, Department of Quantitative Social Science - UCL Institute of Education, University College London.
  7. Fasih, Tazeen & Patrinos, Harry Anthony & Sakellariou, Chris, 2013. "Functional literacy, heterogeneity and the returns to schooling : multi-country evidence," Policy Research Working Paper Series 6697, The World Bank.
  8. Himmler, Oliver & Jaeckle, Robert, 2014. "Literacy and the Migrant-Native Wage Gap," MPRA Paper 58812, University Library of Munich, Germany.
  9. O. D. Marcenaro-Gutierrez & M. Luque & L. A. Lopez-Agudo, 2016. "Balancing Teachers’ Math Satisfaction and Other Indicators of the Education System’s Performance," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 129(3), pages 1319-1348, December.
  10. GÓMEZ , Nuria & TOBARRA, María-Ángeles & LÓPEZ, Luis-Antonio, 2014. "Employment Opportunities In Spain: Gender Differences By Education And Ict Usage," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 14(3), pages 105-130.
  11. Antoni, Manfred & Heineck, Guido, 2012. "Do literacy and numeracy pay off? On the relationship between basic skills and earnings," Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 65404, Verein für Socialpolitik / German Economic Association.
  12. Nicola Brandt, 2015. "Vocational training and adult learning for better skills in France," OECD Economics Department Working Papers 1260, OECD Publishing.
  13. repec:zbw:rwirep:0397 is not listed on IDEAS
  14. 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 & Gregorio Gim (ed.), Investigaciones de Economía de la Educación 5, edition 1, volume 5, chapter 26, pages 499-524 Asociación de Economía de la Educación.
  15. 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.
  16. 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.
  17. 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.
  18. Ingo Isphording, 2013. "Disadvantages of Linguistic Origin – Evidence from Immigrant Literacy Scores," Ruhr Economic Papers 0397, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.

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