Literacy Skill Gain and Loss in Canada and the United States: An Analysis With Policy Implications

• In Event: 44.044 - What the Program for the International Assessment of Adult Competencies Says About Adult Skills, Employment, Education, and the Workforce

Abstract

Objectives
Both the Canadian and U.S. economies are struggling to adjust to the impact of automation and globalization. Economic theory suggests that rapid adjustment depends on finding ways to increase the supply of key cognitive skills. Despite significant increases in the level of post-secondary education in both countries, comparison of the 2003 ALL study and the 2011 PIAAC for US and Canadian adults suggests that significant skill loss has occurred that is large enough to impair macro-economic performance and drive rapid increases in income inequality in both countries. This analysis documents the distribution of individual literacy skill gain and loss in different population sub-groups and explores the factors explain the magnitude and direction of literacy skill change.

Perspective(s)
The analysis is based upon practice/engagement theory – a theory advanced by Steve Reder and his colleges from Portland State that posits that observed adult literacy skill levels are a function of the incidence, frequency, range, complexity and criticality of use. Adults facing high social and economic demand gain skill, adults facing low levels of skill demand tend to lose skill over time.

Methods
The analysis involved creating an individual-level synthetic cohort derived by matching records in the 2003 ALL and 2011 PIAAC samples for Canada and the US.

Data sources
US and Canadian 2003 ALL public micro files and US and Canadian PIAAC public micro files, linked to create a composite data files of synthetic individuals.

Results and/or substantiated conclusions or warrants for arguments/point of view
The observed level of skill loss is large enough to have a material impact on a range of individual labour market, educational, health and social outcomes and on important macro-level outcomes including rates of GDP and productivity growth and of population health. The fact that skill loss is associated with inadequate levels of occupational skill demand and significant misfit between the occupation demand for literacy skill and the skill level of incumbents is critically important to public economic, educational and social policy.

Scientific or scholarly significance of the study or work
The study offers results that are of critical importance to economic policy makers. Governments have traditionally concentrated their policies and programs on financing the creation of new literacy skill supply through initial formal education and on improving market efficiency through the creation of credentials that provide reliable signals of skill. This focus has been justified by a strong assumption that markets would naturally generate sufficient demand to absorb and apply the available supply. The level of observed skill loss suggests that this assumption is unsupported and argues for governments to adopt measures that would precipitate an increase in the knowledge and literacy skill intensity of employment. Without such measures, skill loss will continue to erode the available supply of literacy skill, something that will reduce output and employment levels and reduce competitiveness on global markets.

Author

• T. Scott Murray, DataAngel Policy Research