Chapter 1. Introduction What are basic skills? This dissertation defines basic skills as the fundamental skills that are essential both for effective functioning in everyday life and for underpinning the development of more advanced skills. The term ‘basic skills’ could be used for a varying set of skills. I focus on literacy and numeracy skills. Literacy encompasses the ability to read, write, and comprehend texts, while numeracy involves basic mathematical operations such as addition, subtraction, multiplication, and division. This set of basic skills aligns with the definition of basic skills by the Dutch Inspectorate of Education, which includes literacy, numeracy, and citizenship (see, e.g., Inspectie van het Onderwijs (2024)). I do not consider citizenship because data availability is limited. Why are basic skills important? Basic skills are part of individuals’ human capital, which several prominent economists consistently highlight as essential for economic growth. Smith (1776), for instance, laid the groundwork by emphasizing how education and skill development enhance labor productivity. Marshall (1890) later expanded on this idea and illustrated how education and the accumulation of skills are critical factors in individuals’ productive capacities and economic development. Becker (1964) formalized the concept of human capital, emphasizing that individuals and societies benefit economically from developing skills and knowledge. His theory views human capital as a critical factor for economic growth. Also the endogenous growth 2
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