Scandinavian Working Papers in Economics

Nationaløkonomisk tidsskrift,
Nationaløkonomisk Forening

The Importance of Literacy for Employment and Unemployment Duration

2008, Volume 2008, issue 1, pp. 22-46

Jacob Nielsen Arendt (), Michael Rosholm and Torben Pilegaard Jensen
Additional contact information
Jacob Nielsen Arendt: Institute of Public Health – Health Economics, University of Southern Denmark, Postal: Campusvej 55, DK-5230 Odense M, danmark
Michael Rosholm: Department of Economics, Aarhus School of Business, University of Aarhus, Postal: Nordre Ringgade 1, 8000 Aarhus, danmark
Torben Pilegaard Jensen: Institute of Local Government Studies

Abstract: This study is the first to examine the impact of literacy on unemployment and employment duration. Compared to previous models that use static labour market status, this study reveals important insights into in- and outflows. Unique register-based spell data and survey data are used and search theoretic explanations for the expected impact of literacy are considered. Models with heterogeneous effects of literacy are estimated for transitions from employment to unemployment and vice versa. The results show that literacy is as important as formal education and labour market experience for transi tions from employment in particular. In keeping with expectations, literacy is as - sociated with longer employment durations, differing though across gender, cohabiting status and industries. Although literacy shows no overall impact on unemployment dura tion, this masks a negative impact for the high-skilled in particular.

Keywords: literacy; unemployment; employment

JEL-codes: A10

Language: English

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