The Importance of Functional Literacy: Reading and Math Skills and
Labour Market Outcomes of High School Drop-outs
by Ross Finnie and Ronald Meng
Business and Labour Market Analysis Division
Analytical Studies Branch research paper series, No. 275
Context
The technology-driven "knowledge-based" economy has received
much attention in both the academic and popular press going back well
over a decade. One specific area of interest is the associated new skill
requirements and—obversely—how those lacking the appropriate
levels and types of human capital have been left behind in the modern
economy.
Objectives
This study assesses the effects of literacy and numeracy skills on
the labour market outcomes of Canadian high school drop-outs.
Findings
The study finds that the literacy and numeracy 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. The 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.
Data sources: The data are constructed from the master
file of the Canadian Survey of Literacy Skills Used in Daily Activities.
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the full publication.
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