Social functioning and personal development among individuals with low literacy skills; the role of active labour market policy

Abstract

Abstract Even as education becomes increasingly important for functioning in society, and many welfare states have taken responsibility for providing education, many individuals have insufficient skill levels to fully participate in society. This paper investigates the relationship between literacy skills and basic functioning and participation in society, focusing on the role of the welfare state, and whether individuals with low literacy skills are better off in terms of labour market outcomes, quality of life, digital participation and adult learning in countries with higher investments in active labour market policies (ALMPs), and three underlying spending categories: 1) public employment services, 2) training and 3) private sector employment incentives. Through multi-level analysis of 25 Economic Co-operation and Development (OECD) countries and 139,449 individuals, using individual-level data from the Programme for the International Assessment of Adult Competencies (PIAAC) and country-level data from the OECD, our results show that while low literacy is associated with less favourable conditions related to all outcome variables investigated, ALMPs do not always moderate these negative associations. This is especially true for labour market participation, health and on-the-job training. However, higher ALMP spending is associated with more favourable conditions among low-literate individuals when it comes to job satisfaction, digital participation and life-long learning.