Literacy Skills, Occupational Assignment and the Returns to Over- and Under-Education. International Adult Literacy Survey
Author: Boothby, Daniel
Date: 2002-01-00
Type: Reports - Research
Subjects: Educational Development,Play,Females,Outcomes of Education,On the Job Training,Adult Literacy,Males,Literature,Vocational Education,Education Work Relationship,Foreign Countries,Statistics,Adults,Academic Achievement,Evaluation Methods,Labor Force Development,Surveys

This study uses data from the Canadian panel of the International Adult Literacy Survey to examine the relations between schooling, literacy and occupational assignment and to determine the extent to which returns to over- and under-education are in fact returns to literacy skills. Two measures of required training time for the job are used, both of which are based on detailed occupation. One is the General Educational Development (GED) level of the occupation; the other is the sum of the GED and Specific Vocational Preparation (SVP) times. Regression analysis of the required training time of individuals' jobs shows that literacy skills are an important determinant of occupational assignment by skill level, once schooling is taken into account. Skills acquired through on-the-job training may also play an important role in occupational assignment. The research literature on returns to over-education and under-education examines the relation between workers' skills, as measured by their level of schooling, and the skill requirements of their job. The &quot;typical&quot; findings in this body of research are 1) that over-educated workers (schooling greater than required by their job) earn more than workers in jobs with comparable educational requirements but with the (lower) schooling levels that match these requirements; 2) that over-educated workers earn less than workers with comparable schooling in jobs which require this level of schooling; and 3) that under-educated workers (schooling less than required by their job) earn more than comparably educated workers in jobs which match their schooling, but less than workers in jobs with comparable educational requirements whose schooling matches these requirements. We find this pattern of returns to over-education and under-education for women and men in our sample using regression analysis of the (log of) earnings of full-time workers. When measures of literacy skill are added to these regressions, the estimated coefficients of both over-education and under-education decrease in absolute value for men and the estimated coefficients of under-education increase for women. When a measure of literacy use at work is added, this variable has a positive coefficient; and there are further decreases in the absolute values of the coefficients of both over- and under-education for both women and men. We conclude that literacy skills play a significant role in occupational assignment, independent of the role of schooling, that the return to under-education for both women and men is in large part a return to above average literacy skills for their level of schooling, and that for men, the return to over-education is in large part a return to literacy skills which are above average for their jobs. This would seem to indicate that employers are capable of determining their employees' literacy skills by more accurate means than simply depending on the level of schooling as an indicator of literacy skills. Appendices include: (1) Sample Restrictions and Effects on Sample Size; (2) Issues Concerning the Functional Form of the Earnings Equations; and (3) The Relation between Education, Literacy and Literacy Scores. (Contains 8 tables and 27 endnotes.