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The value of basic skills in the British labour market

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

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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Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 19398.

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Length: 44 pages
Date of creation: May 2007
Date of revision:
Handle: RePEc:ehl:lserod:19398
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  1. 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.
  2. 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.
  3. 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.
  4. 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..
  5. Griliches, Zvi, 1977. "Estimating the Returns to Schooling: Some Econometric Problems," Econometrica, Econometric Society, vol. 45(1), pages 1-22, January.
  6. Steven McIntosh & Anna Vignoles, 2000. "Measuring and assessing the impact of basic skills on labour market outcomes," LSE Research Online Documents on Economics 19557, London School of Economics and Political Science, LSE Library.
  7. F Green & Steven McIntosh & Anna Vignoles, 1999. "Overeducation and Skills - Clarifying the Concepts," CEP Discussion Papers dp0435, Centre for Economic Performance, LSE.
  8. Joshua Angrist & Alan Krueger, 1998. "Empirical Strategies in Labor Economics," Working papers 98-7, Massachusetts Institute of Technology (MIT), Department of Economics.
  9. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1.
  10. 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.
  11. Lorraine Dearden, 1998. "Ability, families, education and earnings in Britain," IFS Working Papers W98/14, Institute for Fiscal Studies.
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