Study: The association between skills and low income, 2012
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Lower levels of literacy are associated with a higher likelihood of low income, even after accounting for other factors that are known to increase the incidence of low income.
This finding is included in a new article released today, titled "The association between skills and low income." The article uses data from the first wave of the Longitudinal and International Study of Adults, which includes scores obtained in the Programme for the International Assessment of Adult Competencies.
In the study, low-income rates are examined across four categories of literacy skills: level 1 and below, level 2, level 3, and levels 4 and 5. Individuals are considered to be in low income if they are living in a household with income lower than 50% of the overall median.
Individuals with lower skills have higher rates of low income
Those at the bottom of the literacy scale (level 1 or below) can only locate single pieces of information in short texts or have basic vocabulary. In 2012, nearly one-fifth (17%) of Canadian adults aged 16 to 65 were in that situation.
Among those who were in this group, 29% were living in a low-income household.
By contrast, among the 13% of Canadian adults who were in the two highest levels of literacy skills in 2012 (levels 4 and 5), 8% lived in a low-income household. Individuals in the highest categories of literacy skills are typically able to integrate information from multiple dense texts and can reason by inference.
Other factors mitigate the relationship between skills and low income
Research on low income has shown that certain groups, such as recent immigrants, Aboriginal people, unattached people aged 45 to 64 (living alone or with others to whom they are unrelated), and people with activity limitations, were more "at risk" of being in a low-income situation.
Each of these groups was also more likely to have a lower level of literacy.
For example, 30% of recent immigrants, 26% of Aboriginal people, 27% of unattached people aged 45 to 64 and 23% of people with activity limitations had a literacy score in the lowest category in 2012, compared with 17% for the overall adult population.
Similarly, among individuals with, at most, a high school diploma, 8% had literacy skills at level 4 or higher, compared with 28% among those who had a university degree.
The concentration of individuals with lower skills within groups that are more "at risk" of low income suggests that at least some portion of the relationship between lower skills and low income could be due to other factors.
After controlling for other characteristics known to increase the risk of low income (such as having a lower level of education or being a recent immigrant), the difference in low-income rates between higher and lower skilled individuals became smaller but remained significant, declining from 21 percentage points to 12 percentage points.
Conversely, differences in skill level also explain why some "at risk" groups have higher rates of low income. For example, the higher rates of low income among recent immigrants and among less educated individuals were partly attributable to lower literacy scores within these groups.
Note to readers
The dataset used in this study is from the first wave of the Longitudinal and International Study of Adults (LISA). The LISA is a longitudinal household survey that collects social and economic data about the Canadian population every two years.
In households containing at least one individual aged 16 to 65, one person per household was selected to complete the Programme for the International Assessment of Adult Competencies (PIAAC) assessment. Initiated by the Organisation for Economic Co-operation and Development, PIAAC is designed to assess the skills and competencies of working-age adults in 26 countries. In total, 8,598 LISA respondents completed the PIAAC assessment between November 2011 and June 2012. This study focuses on this subset of LISA respondents who completed a PIAAC assessment.
The second wave of LISA, planned for release in spring 2016, will feature data for 2014.
The article "The association between skills and low income" is now available in Insights on Canadian Society (75-006-X) from the Browse by key resource module of our website, under Publications.
For more information, contact us (toll-free 1-800-263-1136; 514-283-8300; STATCAN.infostats-infostats.STATCAN@canada.ca).
To enquire about the concepts, methods or data quality of this release, contact Jerry Situ (613-282-4408; firstname.lastname@example.org).
For more information on Insights on Canadian Society, contact Sébastien LaRochelle-Côté (613-951-0803; email@example.com).