Literacy, numeracy and economic performance

Abstract

Since the beginning of the Industrial Revolution, technological change has led to the automation of existing tasks and the creation of new ones, as well as the reallocation of labor across occupations and industries. These processes have been costly to individual workers, but labor demand has remained strong, and real wages have steadily increased in line with productivity growth. I provide evidence suggesting, however, that in recent decades automation has outpaced the creation of new tasks and thus the demand for labor has declined. There is strong disagreement about the future of labor demand, and predictions about technological breakthroughs have a poor track record. Given the importance of overall labor demand for workers' standard of living as well as their ability to adjust to a changing labor market, obtaining accurate forecasts should be a priority for policy makers.

Measuring and assessing the impact of basic skills on labour market outcomes

“…For example, in 1994 Gallup interviewed around 3000 UK adults and assessed their literacy and numeracy skills, using the same Basic Skills Agency tests 16 . As reported in Robinson (1997), the proportions found to be below Entry level in literacy were 4%, and 15% in numeracy, for all age groups. Amongst the age group relevant to the NCDS cohort (age 32-34 in 1994), the proportions below Entry level were just 2% and 10%, in literacy and numeracy respectively.…”

“…However, other studies that have attempted to evaluate the macro effect of specific skills on economic growth have generally found insignificant results (Doyle and Weale, 1994). For example, in international tests, above average scores in mathematics or science do not appear positively correlated with per capita GNP (Robinson, 1997).…”

“…More firms complain about the lack of higher level skills, such as management and I.T. skills (Robinson, 1997). By contrast, several reports have put very high estimates on the cost of poor basic skills for the British economy (ALBSU, 1993), although such calculations are problematic.…”

“…The second major issue concerns which tests/indicators to use to measure attainment in basic skills. In the UK in particular, numerous different tests and indicators have been used to measure literacy and numeracy skills, many of which give slightly different measures of these basic skills, and hence even the official statistics sometimes give conflicting evidence (Robinson, 1997) 8 . For example, in the UK context, age 16 examination results in English and mathematics (GCSE 9 results), various standardised test scores and even the person's overall qualification level, have been used by official sources as potential indicators of numeracy and literacy.…”

“…The final column gives Moser's estimate of the percentage of adults at this level, in terms of their literacy and numeracy skills (based on NCDS data). The Moser Report (DfEE, 1999) 8 For a discussion of the confusing UK terminology surrounding the issue of basic skills, the use of 'Standard Assessment Tasks' (SATs) to measure attainment in literacy and numeracy for National Targets, and more specifically the possible inconsistency between various literacy and numeracy measures -such as SATs and GCSEs (General Certificates of Secondary Education), see Robinson (1997). 9 General Certificates of Secondary Education.…”