OECD / How Inequality in skills is associated with inequality in income

Those with lower skills proficiency also tend to report poorer health, lower civic engagement and less trust.

But the impact of skills goes far beyond earnings and employment. In all countries, individuals with lower proficiency in literacy are more likely than those with better literacy skills to report poor health, to believe that they have little impact on political processes, and not to participate in associative or volunteer activities. In most countries, they are also less likely to trust others. For example, on average across countries, individuals who perform at Level 1 in literacy are twice as likely to report low levels of trust as individuals who score at Level 4 or 5, even after accounting for their education and social background. While the causal nature of these relationships is difficult to discern, these links clearly matter, because trust is the glue of modern societies and the foundation of economic behaviour. Without trust in governments, public institutions and well-regulated markets, public support for ambitious and innovative policies is difficult to mobilise, particularly where short-term sacrifices are involved and where long-term benefits are not evident. Less trust can also lead to lower rates of compliance with rules and regulations and therefore lead to more stringent and bureaucratic regulations. Citizens and businesses may avoid taking risks, delaying decisions regarding investment, innovation and labour mobility that are essential to jump-start growth and regain competitiveness. Emphasising fairness and integrity in policy development and implementation, ensuring that policy making is more inclusive, and building real engagement with citizens all involve citizens’ skills.