This paper examines which incremental increases in numeracy skills, literacy skills and skills and readiness in using ICT for problem solving have the biggest impact on employment participation and related labour market outcomes, and how these compare to incremental increases in educational attainment.
Using the 2012 PIAAC data, our analysis confirms that there are significantly higher earnings and employment returns to both increasing levels of formally recognised education, and to increasing levels of numeracy, literacy and Information and communication technologies (ICT) skills proficiencies controlling for the level of education.
Unsurprisingly, the labour market returns to changes in formally recognised levels of education in general exceed the labour market returns associated with increasing levels of skills proficiency. In the case of literacy and numeracy proficiencies, improved literacy and numeracy skills narrow the labour market outcomes gap between individuals with different levels of formally recognised education, but do not close it completely. The analysis demonstrates more substantial returns to ICT skills. Furthermore, possession of higher levels of ICT skills and lower levels of formally recognised qualification are often associated with higher returns compared to individuals with higher levels of formally recognised education but lower ICT proficiency levels. In other words, ICT skills proficiencies often entirely compensate for lower formally recognised qualifications in the labour market.
The labour market returns to changes in formally recognised levels of education in general exceed the labour market returns associated with increasing levels of skills proficiency (at given education levels). For instance:
- On average, the earnings return across the OECD to upper secondary education is approximately 10% while the returns to tertiary education stand at approximately 37% (compared to lower secondary education).
- The possession of incremental numeracy or literacy skills (i.e. moving from Level 0/1 to Levels 4/5) adds approximately 8-10% to hourly earnings on average for those in possession of upper- secondary level education or below. Furthermore, the returns to incremental literacy and numeracy skills increase with the highest level of formally recognised qualification. In particular, the possession of improved adds approximately 15%-18% to hourly earnings on average for those in possession of tertiary education.
Chosen excerpts by Job Market Monitor. Read the whole story at The Impact of Literacy, Numeracy and Computer Skills on Earnings and Employment Outcomes – Périodiques – OECD iLibrary