Reading problems identified at age 10 increase the negative impact on the lives of those at risk from family poverty and low levels of parental education.
The study, Basic Skills and Social Exclusion, looks at adults born in one week in 1970 who were at high risk of social exclusion in childhood.
From that high risk group, it compares those whose early reading skills were good with those whose were poor.
It found poor readers were 10 per cent less likely to report they were in excellent physical health at the age of 30 than other groups, and they earned about pound;2 an hour less than the average hourly wage.
They were twice as likely to be unemployed at 30 and to have experienced a continuous spell of unemployment for more than a year.
Women who were poor readers were more likely to be single parents and have had more than two children.
They were nearly twice as likely to have a full-time home-care role at the age of 30, restricting their job prospects. They were also twice as likely to have received work-related training.
It also said that poor readers had a higher average score on the "Malaise Scale" of symptoms of depression at age 30, and were twice as likely to feel that "whatever I do has no real effect on my life".
Alan Wells, director of the BSA, said: "The findings highlight once again the importance of establishing strong literacy skills early.
"Defeating social exclusion by directly tackling the risk factors that produce it, and building up the protective factors that prevent it, has never been more necessary."