people and planet

2
reflecting the scarcity of skilled workers (Montenegro
and Patrinos, 2014).
In recent years, international surveys directly measuring
skills among youth and adults have shown that
literacy, numeracy and problem-solving abilities have a
significant impact on earnings. For example, in 22 OECD
countries, a standard deviation increase in literacy and
numeracy skills is associated with an average increase
in hourly wages of 17% and 18%, respectively 12 (Hanushek
et al., 2013). Among urban populations in eight low and
middle income countries, the increase in hourly earnings
associated with a standard deviation increase in literacy
scores ranges from 9 percentage points in Ukraine to
about 25 percentage points in Ghana and Kenya (Valerio
et al., 2015). 13 In both OECD and lower income countries,
returns are highest among prime-age workers (35 to 54),
who presumably are more able to apply their skills in
employment (Chua, 2015; Hanushek et al., 2013).
Differences in returns to literacy skills on earnings
between richer and poorer countries suggest their
relative scarcity in the latter. For example, in the
Plurinational State of Bolivia, Ghana and Kenya, the
returns to literacy are the highest in the World Bank
STEP Skills Measurement Survey sample, but the literacy
scores are the lowest, with the majority of adults
possessing not even basic literacy skills of at least level 2
(Valerio et al., 2015). Nevertheless, there is considerable
scope to improve literacy even in OECD countries,
where large proportions of adults do not possess more
developed skills above level 2 (OECD, 2015a).
Facilitating employment in higher skill occupations is
an important route through which education increases
earnings. It enables workers to perform a range of
complex tasks inherent to higher skill work. In OECD
economies, workers in managerial, professional and
technical occupations have, unsurprisingly, the highest
earnings by some margin compared to those in lesser
skilled occupations (De La Rica and Gortazar, 2016).
Analysis of STEP survey data shows similar patterns for
the low and middle income countries sampled.
However, upper secondary education on its own does
not appear to facilitate access to high skill occupations;
instead tertiary education is likely a necessity. The
education profiles between those in high skill and lower
skill work are strikingly different (Figure 2.6). High skill
employment largely remains the preserve of those
FIGURE 2.6:
Tertiary education is largely required for employment in high skill occupations
Occupational skill by educational attainment
%
100
90
80
70
60
50
40
30
20
10
0
High income
Low and middle
income
High income
Low and middle
income
High income
Low and middle
income
High skill occupations Medium skill occupations Low skill occupations
Primary or less Lower secondary Upper-secondary/post-secondary non-tertiary Tertiary
Notes: Low and middle income countries are Armenia, the Plurinational State of Bolivia, China (Yunnan province), Colombia, Georgia, Ghana, Kenya,
the Lao People’s Democratic Republic, Sri Lanka, the former Yugoslav Republic of Macedonia, Ukraine and Viet Nam. High income countries are
Germany, the Republic of Korea and the United States. Data are weighted by sample target population. Only urban areas are covered in low and
middle income countries. Skilled occupations are classified according to 1 digit ISCO-08 codes, following the ILO Global Employment Trends (GET)
Model Extension (GME) methodology. High skill occupations are those of managers, professionals, technicians and associate professionals. Medium
skill workers are clerical support workers, service and sales workers, skilled agricultural, forestry and fishery workers, craft and related trades
workers, plant and machine operators and assemblers. Low skill workers are those in elementary occupations, such as cleaners, street vendors and
labourers in mining, construction, manufacturing and transport.
Source: GEM Report team calculations based on World Bank STEP Skills Measurement Surveys (2012–2013) and OECD PIAAC Survey of Adult Skills.
2016 • GLOBAL EDUCATION MONITORING REPORT 59