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Functional literacy, educational attainment and earnings - evidence from the international adult literacy survey

  • Kevin Denny


    (Institute for Fiscal Studies and University College Dublin)

  • Colm Harmon

    (Institute for Fiscal Studies)

  • Sandra Redmond

    (Institute for Fiscal Studies)

In this paper a rich and innovative dataset, the International Adult Literacy Survey, is used to examine the impact of functional literacy on earnings. The IALS surveys 12 OECD countries and sub-regions via a consistent questionnaire and includes a number of tests of numeracy and literacy, as well as basic labour market information. This paper examines the effect of these skills on labour market earnings for the Republic of Ireland, Northern Ireland, and for Great Britain. The estimates suggest that while ability has a role in determining earnings the dominant factor remains formal education. It is shown that, particularly for Great Britain, there is a positive interaction between the test score and education in determining earnings.

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Paper provided by Institute for Fiscal Studies in its series IFS Working Papers with number W00/09.

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Length: 21 pp
Date of creation: Apr 2000
Date of revision:
Handle: RePEc:ifs:ifsewp:00/09
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  1. Stewart, Mark B, 1983. "On Least Squares Estimation When the Dependent Variable Is Grouped," Review of Economic Studies, Wiley Blackwell, vol. 50(4), pages 737-53, October.
  2. Denny, Kevin & Harmon, Colm & Redmond, Sandra, 1999. "Wages and Human Capital: Evidence from the Irish Data," Papers 99/3, College Dublin, Department of Political Economy-.
  3. Gosling, Amanda & Machin, Stephen & Meghir, Costas, 2000. "The Changing Distribution of Male Wages in the U.K," Review of Economic Studies, Wiley Blackwell, vol. 67(4), pages 635-66, October.
  4. Tussing, A. Dale, 1978. "Irish Educational Expenditures - Past, Present, and Future," Research Series, Economic and Social Research Institute (ESRI), number GRS92.
  5. Colm Harmon & Ian Walker, 1997. "The Marginal and Average Returns to Schooling," Keele Department of Economics Discussion Papers (1995-2001) 97/07, Department of Economics, Keele University.
  6. Boissiere, M & Knight, J B & Sabot, R H, 1985. "Earnings, Schooling, Ability, and Cognitive Skills," American Economic Review, American Economic Association, vol. 75(5), pages 1016-30, December.
  7. Charette, Michael & Meng, Ronald, 1994. "Explaining language proficiency : Objective versus self-assessed measures of literacy," Economics Letters, Elsevier, vol. 44(3), pages 313-321.
  8. Alan Krueger & Mikael Lindahl, 1998. "Education for Growth in Sweden and the World," Working Papers 790, Princeton University, Department of Economics, Industrial Relations Section..
  9. Kevin Denny & Colm Harmon, 1999. "Wages and human capital," Open Access publications 10197/145, School of Economics, University College Dublin.
  10. William W. Gould & Jeffrey Pitblado & Brian Poi, 2010. "Maximum Likelihood Estimation with Stata," Stata Press books, StataCorp LP, edition 4, number ml4, November.
  11. John Cawley & Karen Conneely & James Heckman & Edward Vytlacil, 1996. "Cognitive Ability, Wages, and Meritocracy," NBER Working Papers 5645, National Bureau of Economic Research, Inc.
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