Using Data to Assess the Economic Impact of Literacy and Numeracy Difficulties in Ireland

1. Using Data to Assess the Economic Impact of Literacy and Numeracy Difficulties in Ireland Elish Kelly The Economic and Social Research Institute The Causes and Effects of Poor Adult Literacy and Numeracy in Ireland – Opportunities for Academic Research 25 September 2014

2. Outline • Background • Research Findings • Data Sources for Future Research

3. Background • In 2011, ESRI commissioned by NALA to conduct research on the economic impact of literacy and numeracy difficulties using two large nationally representative datasets • First study examined the experiences of unemployed individuals with literacy and numeracy difficulties in Ireland • Data from the Department of Social Protection’s/ESRI Profiling Project used to conduct the analysis • Second study investigated literacy and numeracy difficulties in the Irish workplace, and the impact of such difficulties on earnings and training expenditures • Data from the CSO’s National Employment Survey October 2006 used for this analysis

4. First Study:Literacy, Numeracy and Activation among the Unemployment(June 2012)

5. Data: • Department of Social Protection/ESRI Profiling Project: • Amalgamation of survey data from the profiling questionnaire with administrative data from the Live Register and FÁS Customer Event Files • Individuals that registered a new unemployment claim between September and December 2006, and were tracked until June 2008 • Information on claimants literacy and/or numeracy levels: “Have you ever had any difficulty with reading or writing or numbers?” • Rich array of other socio-economic information: gender, marital status, children, educational attainment, health, access to own transport and public transport, employment/unemployment/job history, social welfare benefit type, participation on public job schemes, geographic location, spousal earnings, etc.

6. Main Results

7. Overall Incidence of Literacy and/or Numeracy Difficulties among Unemployed

8. Incidence of Literacy and/or Numeracy Difficulties by Educational Attainment

9. Factors Associated with Literacy and/or Numeracy Difficulties among Unemployed Individuals • Older unemployed individuals (aged 25 and above) less likely to have a literacy and/or numeracy difficulty compared to youth unemployed (aged 18 to 24) • Likelihood of having a literacy and/or numeracy difficulty declines with educational attainment • More likely to have literacy and numeracy issues if unemployed person has poor health • Geographic location matters

10. Impact of Literacy and/or Numeracy Difficulties on Exiting the Live Register to Employment within 12 Months • Unemployed individuals with literacy and/or numeracy difficulties more likely to become long-term unemployed: • Males 7.6 per cent less likely to have exited the Live Register to employment within 12 months • Females 7.3 per cent less likely to have exited unemployment to employment within 12 months

11. Incidence of Activation Training among Unemployed Claimants (Per Cent)

12. Determinants of being Selected for Training • Unemployed individuals with literacy and/or numeracy difficulties were no more likely to be in receipt of FÁS training or on a CE scheme compared to the general unemployed population • Individuals reporting literacy and/or numeracy difficulties were no more likely to be in receipt of particular types of training (general, low-, medium- or high-level specific skills training)

13. Impact of Training on Exiting the Live Register • For all unemployed individuals, FÁS training increases a person’s likelihood of exiting the Live Register within 12 months by 11 per cent • However, among unemployed individuals with literacy and/or numeracy difficulties, FÁS training increases their probability of exiting unemployment by 29 per cent • Thus, individuals with literacy and/or numeracy difficulties in receipt of training under the Activation System (the NEAP) benefit by much more than average • In terms of training type, individuals with literacy and/or numeracy difficulties benefit substantially from both general (four times the population average) and medium-level specific skills (over three times the average) training.

14. Conclusions • Individuals with literacy and/or numeracy difficulties can be effectively activated within the mainstream activation system • Successful activation outcomes for people with such difficulties are not wholly dependent on participating in discreet literacy and numeracy programmes • Roll out of statistical profiling will allow for the identification of individuals with literacy and/or numeracy difficulties and, therefore, placement on appropriate training paths

15. Second Study:Literacy and Numeracy Difficulties in the Irish Workplace: Impact on Earnings and Training Expenditures (September 2012)

16. Data: • National Employment Survey October 2006 (CSO): • Employer-employee linked survey covering public and private sectors - 4,209 firms and 51,252 employees completed their respective questionnaires • Rich dataset containing information on employee earnings, hours worked, occupation, age, gender, nationality, educational attainment, training, employment history, job-related characteristics and various firm-level traits. • Special module on workplace skills: “For your current job, do you require training in any of the following areas - literacy, numeracy, communication, management, language, IT, customer service, technical and practical, other”. • Define those with a literacy or numeracy difficulty as combining a Junior Certificate qualification or less with a response to this question that they required literacy or numeracy training. • Self-completed questionnaire → incidence of literacy difficulties may be understated .

17. Employee-Level Results

18. Incidence of Literacy and Numeracy Difficulties in the Irish Workplace (2006)

19. Incidence of Literacy and Numeracy Difficulties by Industry (2006)

20. Impact of Literacy Difficulties on Employees Earnings • Overall, literacy difficulties were found to reduce a person’s earnings by 4.6 per cent • Wage penalty was larger for females (6.3 per cent) than for males (4.3 per cent) • Employment sector analysis revealed wage discount associated with literacy difficulties is confined to the private sector, and in particular those working full-time: such individuals earn 8.1 per cent less. • Wage distribution analysis revealed employees in the middle to upper end of the earnings distribution are most negatively affected by having a literacy difficulty (wage penalty ranges from 7.1 per cent to 13 per cent).

21. Impact of Numeracy Difficulties on Employees Earnings • On average, no wage penalty was found for having numeracy difficulties. • However, further analysis revealed the earnings of employees with this skill gap that work full-time are marginally negatively effected (3.2 per cent). • In addition, the income distribution analysis revealed the earnings loss associated with a numeracy difficulty is concentrated among full-time workers in the very bottom of the earnings distribution (7.9 per cent).

22. Private Sector Firm-Level Results

23. Incidence of Literacy and Numeracy Skill Gaps at the Level of the Firm • Firms regarded as incurring a literacy or numeracy skill gap if 20 per cent or more of their employees indicated they required training in literacy and/or numeracy. • 1.4 per cent of private sector firms experienced significant literacy difficulties, while 2.4 per cent experienced numeracy skill gaps. • Rates of literacy and numeracy skill gaps were substantially higher in the transport sector and lower in the financial sector. • Both skill gaps more common in large firms employing more than 100 people. • Literacy and numeracy gaps more common in firms with high proportion of shift-workers and TU members; and less common in firms employing large numbers of immigrants and implementing the national wage agreement.

24. Impact of Literacy and Numeracy Difficulties on Firms’ Training Expenditures • No evidence that either literacy or numeracy skill gaps substantially raised private sector firms’ training expenditures. • Instead, the research revealed that firms more likely to respond to skill gaps in the areas of management and languages (both of these skill gaps raised firms’ average training expenditures).

25. Conclusions • Main policy implication of research relates to the provision of appropriate training to deal with literacy and numeracy difficulties among employees, particularly in the private sector. • International evidence shows that the wage penalties associated with literacy and numeracy difficulties can be reduced through the provision of suitable training, and that substantial returns can occur from training of those with the lowest educational qualifications.

26. Data Sources for Future Research

27. The OECD’s Programme for the International Assessment of Adult Competencies (PIAAC) Data • Potential Research Topics: • Is there a ‘digital divide’ in Ireland? Which groups have fallen behind? And what are the consequences for their labour market outcomes? • Does social background influence literacy, numeracy and ICT skills over and above educational level and field of study? • What is the relationship between qualifications and literacy, numeracy and ICT skills across countries and cohorts? • What is the relationship between field of study and literacy, numeracy and ICT skills? • Is there an economic return/penalty to literacy, numeracy and ICT skills over and above educational qualifications? • To what extent does literacy, numeracy and ICT skills account for over/under-education processes?

28. Growing Up in Ireland (GUI) Data • National Longitudinal Study of Children (9 years and 9 Months, 2007) • Potential Research Topics: • Do self-reported literacy and numeracy difficulties among parents have an effect on child outcomes over and above that of educational level? • To what extent are parents involved in supporting their children’s learning through helping with homework, reading with the child etc. at different stages of the child’s life (9 months to 13 years)? - If a parent has self-reported literacy and/or numeracy difficulties, what impact will this have on this type of parential involvement in their children’s learning? • In the GUI questionnaire, teachers are asked to rate children’s academic performance relative to other children in their age group, in i) reading, ii) writing, and iii) mathematics – opportunity to examine this data to assess the level of literacy and numeracy difficulties among children, and what happens their progression over time.

29. Thank You