The Daily, Monday, March 19, 2001. Literacy, numeracy and labour market outcomes in Canada

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Literacy, numeracy and labour market outcomes in Canada

At the international level, wage returns to literacy appear to be highest in countries, such as Canada and the United States, where the demand for literacy skills is high and where literacy levels are highly variable. This study, available today, attempts to isolate the impact of literacy on the wages of Canadian workers. The findings confirm the importance of literacy to individual economic success in the labour market.

The study used Canadian data from the International Adult Literacy Survey to investigate the relationship between labour market success and literacy skills. The most commonly used and widely accepted measure of labour market success is earnings. Accordingly, this paper focussed on the relationship between literacy and annual, weekly and hourly earnings. It also takes into account other factors that influence labour market outcomes, such as educational attainment, gender and experience.

Literacy has a large impact on earnings, and accounts for about one-third of the estimated "return on education." Each additional year of education raises annual earnings by about 8.3%. Of that, about 3.1 percentage points result from the combined influences of education on literacy and, in turn, literacy on earnings.

Educational attainment appears to have a much larger impact on literacy than does work experience. Results suggest that general labour market experience has little net effect on literacy.

Results also provide some support for the view that literacy skills may play a role in how well immigrants adjust to their new labour market. The small number of immigrants in the sample precludes a stronger conclusion about the relationship between literacy skills and the earnings pattern of immigrants relative to the native-born. Further research is needed in this area.

Individual earnings and parents' education levels are positively linked. However, there is little evidence that the educational attainment of parents exerts a positive impact on the child's earnings as an adult, once both educational attainment and literacy skills are taken into account. This suggests that the positive association between parents' education and individual earnings is due principally to the influence of parents' education on the child's literacy skills and educational attainment.

For more information, or to enquire about the concepts, methods or data quality of this release, contact Scott Murray (613-951-9035), Institutions and Social Statistics Branch.