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Links Between Literacy and Numeracy Skills and Labour Market Outcomes

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  • Shomos, Anthony

    (Productivity Commission)

Abstract

This Productivity Commission staff working paper (by Anthony Shomos) was released in October 2010. Literacy and numeracy skills are key components of human capital, which is an important driver of economic growth. This paper utilises data from a 2006 survey on the literacy and numeracy skills of the Australian adult population. Models were used to estimate the effect of improved literacy and numeracy skills on the probability of labour force participation and on wages. Results confirm previous research in the human capital literature –– that improving literacy and numeracy skills has a positive, statistically significant effect on labour market outcomes. Improving educational attainment was also estimated to have a positive, statistically significant effect on labour force participation and on wages. However, once literacy and numeracy skills were controlled for, the effect of increasing educational attainment on labour force participation and on wages was reduced. Some of the benefit occurs because more highly educated people tend to have higher literacy and numeracy skills. Literacy and numeracy skills are developed through education, but they can also be enhanced in other ways. Understanding the factors that influence literacy and numeracy skills is important and could be further explored with the data used in this paper. The views expressed in this paper are those of the staff involved and do not necessarily reflect those of the Productivity Commission.

Suggested Citation

  • Shomos, Anthony, 2010. "Links Between Literacy and Numeracy Skills and Labour Market Outcomes," Staff Working Papers 104, Productivity Commission, Government of Australia.
  • Handle: RePEc:ris:prodsw:2010_004
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    References listed on IDEAS

    as
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    2. Peterson, Deborah C. & Dwyer, Gavan & Appels, David & Fry, Jane, 2004. "Modelling Water Trade in the Southern Murray-Darling Basin," Staff Working Papers 31925, Productivity Commission.
    3. Andrew C. Worthington & Mark Hoffman, 2008. "An Empirical Survey Of Residential Water Demand Modelling," Journal of Economic Surveys, Wiley Blackwell, vol. 22(5), pages 842-871, December.
    4. Chow, Gregory C., 1997. "Dynamic Economics: Optimization by the Lagrange Method," OUP Catalogue, Oxford University Press, number 9780195101928.
    5. Geoff Edwards, 2006. "Whose Values Count? Demand Management for Melbourne's Water," The Economic Record, The Economic Society of Australia, vol. 82(s1), pages 54-63, September.
    6. R. Quentin Grafton & Michael B. Ward, 2008. "Prices versus Rationing: Marshallian Surplus and Mandatory Water Restrictions," The Economic Record, The Economic Society of Australia, vol. 84(s1), pages 57-65, September.
    7. Ronald Hochreiter & Georg Pflug, 2007. "Financial scenario generation for stochastic multi-stage decision processes as facility location problems," Annals of Operations Research, Springer, vol. 152(1), pages 257-272, July.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    literacy; numeracy; labour markets; human capital; labour force participation;

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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