Literacy sharing, assortative mating, or what? Labour market advantages and proximate illiteracy revisited

This paper explores the relationship between household literacy and the labour market outcomes of illiterate household members which Basu, Narayan and Ravallion (2002) report using Household Income and Expenditure data from Bangladesh. BNR attribute a considerable wage premium for proximate-illiterate women in off-farm employment to labour productivity gains from intra-household literacy sharing. This wage premium also suggests that women may be more efficient recipients of literacy externalities than men. We propose that any such relationship might not be due to higher labour productivity but may have other explanations such as systematically different and unobserved attributes of illiterate females married into literate households. We also pay attention to the negative selection of illiterate females into non-farm wage employment, which contrary to received wisdom suggests that household literacy may not be unambiguously progressive for females. We propose that the widely reported finding that female literacy impacts more positively than male literacy on child wellbeing may not extend into similar effects in other realms of household activities where males may be more efficient transmitters of literacy externalities. Using more recent Bangladesh and similar Indian data we find somewhat different results for household literacy externalities on non-farm wage employment of household illiterates, and also show that any such effects are conditioned on the social identity of the individuals, their geographic location and their sector of employment. We caution against drawing conclusions from one finding using one data set apparently ignoring contrary findings, where that finding is congruent with fashionable development views, such as the advantages of females as generators of development.