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The Importance of Functional Literacy: Reading and Math Skills and Labour Market Outcomes of High School Drop-outs

Author Info

Listed author(s):
  • Finnie, Ross
  • Meng, Ronald

Abstract

This study assesses the effects of literacy and numeracy skills on the labour market outcomes of Canadian high school drop-outs. We find that these skills have significant effects on the probability of being employed and on hours and weeks of work for both men and women, and also have strong (direct) influences on men's, but not women's, incomes. These findings imply that high school curricula that develop literacy and numeracy skills could provide significant returns even for those who do not complete their programs and wind up at the lower end of the labour market. Our findings similarly suggest that training programs catering to drop-outs could substantially improve these individuals' labour market outcomes by developing these basic skills. The results also have implications for dual labour market theory, since it is often assumed that the secondary market is characterized by minimal returns to human capital'contrary to what is found here.

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File URL: http://www5.statcan.gc.ca/olc-cel/olc.action?ObjId=11F0019M2006275&ObjType=46&lang=en&limit=0
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Paper provided by Statistics Canada, Analytical Studies Branch in its series Analytical Studies Branch Research Paper Series with number 2006275e.

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Date of creation: 27 Mar 2006
Handle: RePEc:stc:stcp3e:2006275e
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Keywords: Education; training and learning; Employment and unemployment; Household; family and personal income; Income; pensions; spending and wealth; Job training and educational attainment; Labour; Literacy; Outcomes of education;

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  1. Ross Finnie, 2002. "Minorities, Cognitive Skills and Incomes of Canadians," Canadian Public Policy, University of Toronto Press, vol. 28(2), pages 257-273, June.
  2. Peter George & Peter Kuhn, 1994. "The Size and Structure of Native-White Wage Differentials in Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 27(1), pages 20-42, February.
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  8. Rivera-Batiz, Francisco L., 1990. "English language proficiency and the economic progress of immigrants," Economics Letters, Elsevier, vol. 34(3), pages 295-300, November.
  9. David A Green & W Craig Riddell, "undated". "Literacy, Numeracy and Labour Market Outcomes in Canada," Canadian International Labour Network Working Papers 47, McMaster University.
  10. Neal, Derek A & Johnson, William R, 1996. "The Role of Premarket Factors in Black-White Wage Differences," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 869-895, October.
  11. George J. Borjas, 1994. "Long-Run Convergence of Ethnic Skill Differentials: The Children and Grandchildren of the Great Migration," ILR Review, Cornell University, ILR School, vol. 47(4), pages 553-573, July.
  12. Murnane, Richard J & Willett, John B & Levy, Frank, 1995. "The Growing Importance of Cognitive Skills in Wage Determination," The Review of Economics and Statistics, MIT Press, vol. 77(2), pages 251-266, May.
  13. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863 Elsevier.
  14. Rivera-Batiz, Francisco L., 1990. "Literacy skills and the wages of young black and white males in the U.S," Economics Letters, Elsevier, vol. 32(4), pages 377-382, April.
  15. John M. Abowd & Henry S. Farber, 1982. "Job Queues and the Union Status of Workers," ILR Review, Cornell University, ILR School, vol. 35(3), pages 354-367, April.
  16. Green, David A & Riddell, W Craig, 1997. "Qualifying for Unemployment Insurance: An Empirical Analysis," Economic Journal, Royal Economic Society, vol. 107(440), pages 67-84, January.
  17. Barry R. Chiswick, 1988. "Differences in Education and Earnings Across Racial and Ethnic Groups: Tastes, Discrimination, and Investments in Child Quality," The Quarterly Journal of Economics, Oxford University Press, vol. 103(3), pages 571-597.
  18. Michael Charette & Ronald Meng, 1994. "The Determinants of Welfare Participation of Female Heads of Household in Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 27(2), pages 290-306, May.
  19. Arthur Sweetman & Gordon Dicks, 1999. "Education and Ethnicity in Canada: An Intergenerational Perspective," Journal of Human Resources, University of Wisconsin Press, vol. 34(4), pages 668-696.
  20. George J. Borjas, 1994. "Long-Run Convergence of Ethnic Skill Differentials," NBER Working Papers 4641, National Bureau of Economic Research, Inc.
  21. Ross Finnie & Ronald Meng, 2001. "Cognitive skills and the youth labour market," Applied Economics Letters, Taylor & Francis Journals, vol. 8(10), pages 675-679.
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