The low skills trap: the failure of education and social policies in preventing low-literate young people from being long-term NEET

This paper investigates to what extent the likelihood of young people being long-term NEET can be explained by low literacy skills, how this varies across advanced countries, and how this cross-national variation can be explained by education and social policies. We use PIAAC data and include macro-level indicators on education and social policies. We analyze the likelihood of being long-term NEET versus being in employment or in education/ training among some 34,000 young people aged 20-30 from 25 countries. We find that low-literate young people are more likely to be long-term NEET. While NEET risks are associated with countries' institutional characteristics, this does not mean that these characteristics and policies always work in favour of lowliterate young people. Although high levels of (enabling) ALMP generally reduce the risk of being NEET, they do so less for low-literate young people. Additionally, young people living in social-democratic welfare states are less likely to be NEET, but low-literate young people seem to profit less from this.