Skills and Wage Inequality: Evidence from PIAAC (EDU Working Paper No. 114)
This paper exploits data from the Survey of Adult Skills (PIAAC) to shed light on the link between measured cognitive skills (proficiency), (formal) educational attainment and labour market outcomes. After presenting descriptive statistics on the degree of dispersion in the distributions of proficiency and wages, the paper shows that the cross-country correlation between these two dimensions of inequality is very low and, if anything, negative. As a next step, the paper provides estimates of the impact of both proficiency and formal education at different parts of the distribution of earnings. Formal education is found to have a larger impact on inequality, given that returns to education are in general much higher at the top than at the bottom of the distribution. The profile of returns to proficiency, by contrary, is much flatter. This is consistent with the idea that PIAAC measures rather general skills, while at the top end of the distribution the labour market rewards specialised knowledge that is necessarily acquired through tertiary and graduate education. Finally, a decomposition exercise shows that composition effects are able to explain a very limited amount of the observed cross-country differences in wage inequality. This suggests that economic institutions, by shaping the way personal characteristics are rewarded in the labour market, are the main determinants of wage inequality.
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Comparison of PIAAC and PISA Frameworks for Numeracy and Mathematical Literacy (EDU Working Paper No.102)
This paper describes key aspects of the frameworks for the assessment of adult numeracy and mathematical literacy in PIAAC and PISA, which are OECD two flagship programs for international comparative assessment of competencies. The paper examines commonalities and differences in how the constructs of adult numeracy and mathematical literacy were assessed in PIAAC and PISA, and sketches selected challenges associated with interpretation of results from these surveys.
Skill Mismatch and Public Policy in OECD Countries (ECO Working Paper No.1210)
This paper explores the relationship between skill mismatch and public policies using micro data for 22 OECD countries from the recent OECD Survey of Adult Skills (PIAAC). Results suggest that differences in skill mismatch across countries are related to differences in public policies. After controlling for individual and job characteristics, well-designed product and labour markets and bankruptcy laws that do not overly penalise business failure are associated with lower skill mismatch.
Labour Market Mismatch and Labour Productivity: Evidence from PIAAC Data (ECO Working Paper No. 1209)
This paper explores the link between skill and qualification mismatch and labour productivity using cross-country industry data for 19 OECD countries. Utilising mismatch indicators aggregated from micro-data sourced from the recent OECD Survey of Adult Skills (PIAAC), the main results suggest that higher skill and qualification mismatch is associated with lower labour productivity, with over-skilling and under-qualification accounting for most of these impacts. A novel result is that higher skill mismatch is associated with lower labour productivity through a less efficient allocation of resources, presumably because when the share of over-skilled workers is higher, more productive firms find it more difficult to attract skilled labour and gain market shares at the expense of less productive firms. At the same time, a higher share of under-qualified workers is associated with both lower allocative efficiency and within-firm productivity – i.e. a lower ratio of high productivity to low productivity firms. While differences in managerial quality can potentially account for the relationship between mismatch and within-firm productivity, the paper offers some preliminary insights into the policy factors that might explain the link between skill mismatch and resource allocation.
The educational roots of trust (EDU Working Paper No. 119)
Trust is important for social and economic well-being, for enhancing social cohesion and strengthening resilience, and for maintaining security and order in our societies. Trust is the foundation upon which social capital is built and it also is intimately related to human capital. This work examines the association between education and levels of interpersonal trust, using data from the OECD’s Survey of Adult Skills (PIAAC). Our analysis demonstrated that education strengthens the cognitive and analytical capacities needed to develop, maintain, and (perhaps) restore trust in both close relationships as well as in anonymous others. It does so both directly, through building and reinforcing literacy and numeracy in individuals, and indirectly, through facilitating habits and reinforcing behaviours such as reading and writing at home and at work. Education and trust are thus fundamentally intertwined and dependent on each other. While all countries across the OECD have been striving to improve their education systems in terms of student achievement levels, this analysis suggests that there are also concrete elements that could be usefully addressed in order to reinforce and strengthen trust.
Skills and labour market performance in Sweden (ECO Working Paper No. 1233)
Both educational attainment and skills, as measured in the OECD Survey of Adult Skills (PIAAC), are high in Sweden. They are not perfect substitutes, but both are to some degree necessary for successfully integrating in the Swedish labour market. This paper describes the distribution of proficiency in literacy in the population and explores its determinants, and uncovers a strong relationship between literacy and the likelihood of being employed. The relationship between proficiency in literacy and the likelihood of participating in adult education is also explored. Lower employment prospects for immigrants are well explained by lower literacy proficiency, lower education and less favourable socio-economic backgrounds.
A new measure of skills mismatch: theory and evidence from the Survey of Adult Skills (PIAAC) (OECD Social, Employment and Migration Working Papers No.153)
This paper proposes a new measure of skills mismatch that combines information about skill proficiency, self-reported mismatch and skill use. The theoretical foundations underlying this measure allow identifying minimum and maximum skill requirements for each occupation and to classify workers into three groups, the well-matched, the under-skilled and the over-skilled. The availability of skill use data further permit the computation of the degree of under and over-usage of skills in the economy. The empirical analysis is carried out using the first wave of the OECD Survey of Adult Skills (PIAAC) and the findings are compared across skill domains, labour market status and countries.
Returns to Skills Around the World: Evidence from PIAAC (EDU Working Paper No.101)
Existing estimates of the labor-market returns to human capital give a distorted picture of the role of skills across different economies. International comparisons of earnings analyses rely almost exclusively on school attainment measures of human capital, and evidence incorporating direct measures of cognitive skills is mostly restricted to early-career workers in the United States. Analysis of the new PIAAC survey of adult skills over the full lifecycle in 22 countries shows that the focus on early-career earnings leads to underestimating the lifetime returns to skills by about one quarter. On average, a one-standard-deviation increase in numeracy skills is associated with an 18 percent wage increase among prime-age workers. But this masks considerable heterogeneity across countries. Eight countries, including all Nordic countries, have returns between 12 and 15 percent, while six are above 21 percent with the largest return being 28 percent in the United States. Estimates are remarkably robust to different earnings and skill measures, additional controls, and various subgroups. Intriguingly, returns to skills are systematically lower in countries with higher union density, stricter employment protection, and larger public-sector shares.
Ageing and Skills: A Review and Analysis of Skill Gain and Skill Loss Over the Lifespan and Over Time (EDU Working Paper No.72)
The relationship between ageing and skills is becoming an important policy issue, not least in the context of population ageing. Data from the Programme for the International Assessment of Adult Competencies (PIAAC) will potentially add considerably to the understanding of the relationship between ageing and foundation skills. In particular, the fact that data from the 1994-1998 International Adult Literacy Survey (IALS) and the 2003-2007 Adult Literacy and Lifeskills Survey (ALL) will be linked with PIAAC offers a unique opportunity to examine trends over time at the cohort level for a wide range of countries. Specifically, repeated measures will enable an analysis of whether there is skill gain and skill loss over the lifespan of cohorts and overtime between cohorts. This is especially important because age-skill profiles observed on the basis of a single cross-section are difficult to interpret. With this as a backdrop, this paper has sought to provide an overview of what is known about age-skill profiles and to conduct an analysis that demonstrates how trend data based on repeated cross-sectional observations of direct measures of skill at the cohort level can be used to estimate skill gain and skill loss over the lifespan and over time.
An Analysis of Skill Mismatch Using Direct Measures of Skils (EDU Working Paper No.63)
The focus of this study is on the potential causes of skill mismatch, the extent of skill mismatch, the sociodemographic make-up of skill mismatch, and the consequences of skill mismatch in terms of earnings as well as employer sponsored adult education/training. A distinction is made between skill mismatch and education mismatch. The analysis is based on the 2003-2007 Adult Literacy and Lifeskills Survey (ALLS) – a dataset similar to the one that is forthcoming from the Programme for International Assessment of Adult Competencies (PIAAC) in 2013. These studies contain direct measures of key foundation skills as well as measures of the use of certain generic skills at work which allow for a direct measure of skill mismatch. The analysis points to the complex ways in which mismatch is generated and the need for an accurate and up to date measure of mismatch, one that reflects the possibilities for skill gain and skill loss over the lifespan, and reflects differences in the quality of qualifications.
How Technology Changes Demands for Human Skills (EDU Working Paper No.45)
This paper places the competencies to be measured by the OECD’s Programme for the International Assessment of Adult Competencies (PIAAC) in the context of the technological developments which are reshaping the nature of the workplace and work in the 21st century. The largest technological force currently shaping work is the computer. Computers are faster and less expensive than people in performing some workplace tasks and much weaker than people in performing other tasks. On the basis of an understanding of the kinds of work computers do well, it is possible to describe the work that will remain for people in the future, the skills that work requires and the way that computers can assist people in performing that work. The paper argues that a technology-rich workplace requires foundational skills including numeracy and literacy (both to be tested in PIAAC), advanced problem-solving skills or Expert Thinking (similar to the construct of Problem Solving in Technology-Rich Environments to be tested in PIAAC) and advanced communication skills or Complex Communication (not being tested in PIAAC).
International Adult Literacy and Basic Skills Surveys in the OECD Region (EDU Working Paper No.26)
Both within and beyond the OECD region, governments and other stakeholders are increasingly interested in the assessments of the skills of their adult populations in order to monitor how well prepared they are for the challenges of the knowledge based society. The current paper provides an overview of the two international assessments of adult literacy which have already taken place in the OECD region – the International Adult Literacy Survey (IALS) and the Adult Literacy and Life Skills Survey (ALL) as well as of the OECD Programme for the International Assessment of Adult Competencies (PIAAC). The conceptual framework for the assessments is described with a focus on the links between the different assessments. In addition, the paper provides a survey of the outputs of IALS and ALL including a review of the major themes addressed in the literature which has used data from these surveys as well as a brief discussion of their policy impact.
Access to Education Over the Working Life in Sweden: Priorities, Institutions and Efficiency (EDU Working Paper No.62)
To facilitate individuals to adjust their skills to changes in market demands, Sweden has a relatively generous policy to stimulate formal adult education at the compulsory, upper secondary and tertiary levels. This paper provides an overview of what research has reported to assess if and/or how it may be an efficient use of tax payers’ money. Some institutional factors are also briefly presented to discuss what is likely to be required for such a policy to exist in a particular country.
Final Report of the Development of an International Adult Learning Module: Recommendations on Methods, Concepts and Questions in International Adult Learning Surveys OECD Education Working Paper No. 21 (EDU Working Paper No.21)
Policy interest in international surveys on Adult Learning (AL) has increased strongly. AL survey data are used as benchmarks for a country‘s educational system. However, results of key indicators like participation in learning activities often vary remarkably between different data sources. Stating that these differences are due to varying concepts and methods is not enough. The key question is: Which figures represent reality more appropriately? Therefore, evaluation of survey concepts and methods is crucial for international comparison of Adult Learning. This report provides guidelines on methodological and conceptual issues. Part one covers methodological aspects while part two deals with concepts, definitions and example questions. Recommendations are based on input from 14 countries.
Literacy for Life - Further Results from the Adult Literacy and Life Skills Survey
The Adult Literacy and Life Skills Survey (ALL) study builds on the International Adult Literacy Survey (IALS), the world’s first internationally comparative survey of adult skills undertaken in three rounds of data collection between 1994 and 1998. The foundation skills measured in the ALL survey include prose literacy, document literacy, numeracy,and problem solving. Additional skills assessed indirectly include familiarity with and use of information and communication technologies.This volume presents general findings for the complete group of eleven countries or regions that collected ALL data between 2002 and 2008 in two main waves of collection. Countries that participated in the first wave are: Bermuda, Canada, Italy, Norway, Switzerland, the United States and the Mexican State of Nuevo Leon. The countries that participated in the second wave are: Australia, Hungary, the Netherlands, and New Zealand.
Learning a Living - First Results of the Adult Literacy and Life Skills Survey
The fundamental goal of the Adult Literacy and Life Skills Survey (ALL) is to shed new light on the twin processes of skill gain and loss. This is achieved through measurement of prose and document literacy of adults for a second time in some countries. Further, the study has extended the range of skills measured by adding problem solving, numeracy and information and communication technology (ICT) skill. This allows one to examine the profiles of important foundation skills. Thus the study makes it possible, for the first time, to explore the interrelationships among skill domains as well as their links to major antecedents and outcomes, such as the quantity and quality of initial education and skill’s impact on employability, wages, and health.
Literacy in the Information Age - Final Report of the International Adult Literacy Survey
The study offers an understanding of the nature and magnitude of literacy issues faced by countries and explores new insights into the factors that influence the development of adult skills in various settings – at home, at work and across countries. The 20 countries represented account for over 50 per cent of the world’s entire gross domestic product. As such, the literacy data can contribute importantly to an understanding of the demand and supply of skills in the global, knowledgebased economy. The results confirm the importance of skills for the effective functioning of labour markets and for the economic success and social advancement of both individuals and societies. They offer policy makers a useful tool for policy analysis and for crafting policies and programmes that can contribute to economic and social progress.
Definition and Selection of Competencies: Theoretical and Conceptual Foundations (DeSeCo) - Background paper
The complexity of the demands generated by an increasingly interdependent, changing and conflictual world places the objectives of education and the strategies to achieve education goals in center stage of the debate on broad educational reform. In line with a growing concern about the adequacy and quality of education and training and the actual return on public educational expenditure, there has been since the mid-1980s an increased policy interest in comparable outcome indicators in the education field. In fact, measuring the quality of education outcomes, estimating economic and social returns to learning, and identifying key determinants to educational success is an ongoing discussion topic that stimulates keen interest around the world.