Does Inequality in Skills Explain Inequality of Earnings across Advanced Countries? NBER Working Paper Series.

For full text: http://www.nber.org/papers/w8140.

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36

Adult Education; Adult Literacy; Comparative Analysis; Developed Nations; Education Work Relationship; Educational Attainment; Employment Level; Employment Patterns; Employment Qualifications; Equal Education; Foreign Countries; Job Skills; Literacy Education; Numeracy; Postsecondary Education; Role of Education; Salary Wage Differentials; Secondary Education; Trend Analysis

Canada; European Union; United Kingdom; United States

The question of whether inequality in skills explains inequality of earnings across advanced countries was examined through a review of data from the International Adult Literacy Survey (IALS), which examined the prose, document, and quantitative literacy skills of adults in 12 member countries of the Organisation for Economic Cooperation and Development. In all countries, jobless individuals tended to have lower skill levels than workers. The distribution of earnings and the distribution of skills varied widely among advanced countries, with the major English-speaking countries, the United States, the United Kingdom, and Canada, having much greater inequality in both earnings and skills than continental European Union countries. According to data from the IALS, skill inequality explains only approximately 7% of the cross-country difference in earnings inequality. The dispersion of earnings in the United States was found to be larger in narrowly defined skill groups than was the dispersion of earnings for European workers overall. In the United States, IALS test scores rose substantially with movement up the income scale, with the increase in scores averaging 17 points per income quintile. The bulk of cross-country differences in earnings inequality were found to occur within skill groups rather than between them. (The bibliography contains 20 references. Twelve tables/figures are included.) (MN)

2002

ED455406