Commissioned by the Department for Education and Employment, the study found that improving adults' basic skills would enable more than 100,000 extra people to find work by improving their numeracy. It would help an extra 45,000 into work by boosting their literacy.
Adults who brush up their skills not only improve their job prospects but are in better health, are likely to be more active citizens and find their children are less likely to struggle at school, the study by academics from London University's Institute of Education, London School of Economics and the Institute for Fiscal Studies found.
The study used information gathered over the lifetimes of a sample of people born in 1958 to analyse the connection between literacy and numeracy skills and earnings and employability.
The 1999 Moser Report on improving adult literacy and numeracy found that seven millionpeople lacked basic skills. It concluded that 80 per cent of adults had basic literacy skills compared to just 60 per cent in numeracy. The report set out new targets for 2010,which would require 90 per cent of adults to reach the required literacy standard and 70 per cent in numeracy.
Meanwhile, separate research found that ambition, social skills and a positive attitude are not as important to future earnings as having good literacy and numeracy.
The study by academics from the Centre for the Economics of Education concluded: "Literacy and numeracy skills display a larger, more robust connection with individuals' labour market and other outcomes than their motivation or 'soft skills' such as sociability, caring skills and attitudes to life in general."
Some 'soft skills' were found to be linked to achievement.
Men who considered themselves to be loners were more likely to get better qualifications than their peers, the study found. Men who admitted bullying their classmates and timid women did less well.