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Thomas StorringDirector – Economics and Statistics
Tel: 902-424-2410Email:

October 25, 2019

Statistics Canada recently released a study regarding the influence that early skills acquisition has on later earnings. Specifically, this study looks at how reading proficiency at age 15 affects early career employment earnings.

Skills and educational attainment are closely linked, as those with higher skills are more likely to acquire post-secondary education. Education, in turn, is associated with improved labour market outcomes. However, education can also improve skills, so there is a challenge in determining the effect of each factor on labour market outcomes. The approach taken in this study is to evaluate skills at an early age and follow individuals over time to observe their employment outcomes.

Data for this study come from the Youth in Transition Survey, which is linked to reading scores from the Programme for International Student Assessment (PISA) at age 15 and administrative tax data (T1 Family File). This allows for analysis of the respondent’s earnings up to the age of 25 – a time reflecting the early careers of young people.

The study poses three questions:

  • Does reading ability at age 15 – beyond influencing educational attainment – influence the employment earnings of young adults after they leave school?
  • How do other characteristics at age 15, such as parental income and high school grades interact with reading skills to influence employment earnings after graduation?
  • Do the effects vary based on the number of years since leaving school?

In the sample, 51 per cent of young women and 38 per cent of young men had high levels of reading proficiency (PISA score of 4 or 5). Proportions at level 3 were similar, while young men were more likely to have lower scores (33 per cent at levels 0, 1 or 2) than young women (20 per cent). Higher reading proficiency was more common among youth with high parental income and whose parents had a university education.

In the first year after leaving school, young women with high reading scores earned average employment income that was 53 per cent higher than average earnings of young women with low reading scores. Young men with high reading scores earned 29 per cent more than young men with low reading scores. Over time, employment earnings increased for those with both high and low reading scores, but the gap persisted. These results do not account for differences in individual characteristics that may also affect earnings.

Individual characteristics such as parental income and education level, immigration status, grade level and overall marks at age 15 fully explained the male earnings gap between high and low levels of reading proficiency in the first year after leaving school and six years later. For women, controlling for these characteristics did not eliminate the gap in year 1 or year 7. However, after controlling for the individual’s level of education and field of study at the time of earning, the earnings gap was no longer statistically significant for women.

These results suggest that, for women, reading proficiency acts on early career employment earnings through educational attainment. For men, reading proficiency at age 15 did not have any influence on early career employment earnings which appear to be a product of other factors, including post-secondary education, academic achievement, and parental income. The authors note that these results do not imply that skills do not play a role in employment earnings, as other types of skills such as mathematical, problem-solving, or social skills could play a more important role. Skills acquired later in life may also play a role.

Daily release | Full article

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