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The Wage Premium on Tertiary Education: New Estimates for 21 OECD Countries

Author

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  • Hubert Strauss
  • Christine de la Maisonneuve

    (OECD)

Abstract

This paper presents cross-section estimates of gross hourly wage premia on tertiary education. They are based on a unified framework for 21 OECD countries from the 1990s to the early 2000s and use international household surveys to maximise international comparability. The results of the “augmented” Mincerian wage equations point to an average hourly gross wage premium on completed tertiary education of 55% in 2001 (country-gender average), translating into a premium of close to 11% per annum of tertiary education. Wage premia display little variation over time but huge cross-country variation: at 6% they are lowest in Greece and Spain (men and women) as well as in Austria and Italy (women) while reaching 14%-18% in Hungary, Portugal, and in most Anglo-Saxon countries. Given that the wage premium is the single most important driver of private returns to education, the results presented here have potentially important implications for policies that aim at increasing investment in human capital. La prime salariale pour l'éducation supérieure : nouvelles estimations pour 21 pays de l'OCDE Cette étude présente des estimations transversales de la prime salariale horaire brute pour l’éducation supérieure qui reposent sur un cadre harmonisé pour 21 pays de l’OCDE entre les années 90 et le début des années 2000. L’étude est basée sur des enquêtes internationales auprès des ménages afin de maximiser la comparaison entre pays. L’ « extension » des équations salariales de Mincer donne comme résultat une prime salariale horaire moyenne brute à l’achèvement d’un diplôme d’éducation supérieure de 55% en 2001 (en moyenne pour les hommes et les femmes pour tous les pays), ce qui est équivalent à près de 11% par année d’éducation supérieure. Les primes salariales varient peu au cours du temps mais de manière significative à travers les pays : les plus faibles sont en Grèce et en Espagne à 6% (hommes et femmes) ainsi qu’en Autriche et en Italie (femmes) alors qu’elles atteignent 14%-18% en Hongrie, au Portugal et dans la plupart des pays anglo-saxons. Étant donné que la prime salariale est le déterminant le plus important du rendement privé de l’éducation supérieure, les résultats peuvent avoir des implications importantes pour les politiques visant l’augmentation du stock de capital humain.

Suggested Citation

  • Hubert Strauss & Christine de la Maisonneuve, 2007. "The Wage Premium on Tertiary Education: New Estimates for 21 OECD Countries," OECD Economics Department Working Papers 589, OECD Publishing.
    • Handle: RePEc:oec:ecoaaa:589-en
    DOI: 10.1787/033568367526
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    Cited by:

    1. Hipólito Simón, 2010. "International Differences in Wage Inequality: A New Glance with European Matched Employer–Employee Data," British Journal of Industrial Relations, London School of Economics, vol. 48(2), pages 310-346, June.
    2. Andy Feng & Anna Valero, 2020. "Skill-Biased Management: Evidence from Manufacturing Firms," The Economic Journal, Royal Economic Society, vol. 130(628), pages 1057-1080.
    3. Alejandro García Pozo & Andrés J. Marchante Mera & José Luis Sánchez Ollero, 2011. "Occupational Differences in the Return on Human Capital in the Spanish Travel Agency and Hospitality Industries," Tourism Economics, , vol. 17(6), pages 1325-1345, December.
    4. Peter Huber & Julia Bock‐Schappelwein, 2014. "The Effects of Liberalizing Migration on Permanent Migrants' Education Structure," Journal of Common Market Studies, Wiley Blackwell, vol. 52(2), pages 268-284, March.
    5. Jill Rubery, 2013. "Public sector adjustment and the threat to gender equality," Chapters, in: Daniel Vaughan-Whitehead (ed.), Public Sector Shock, chapter 2, pages 43-83, Edward Elgar Publishing.
    6. Lynn A. Karoly, 2010. "The Role of Education in Preparing Graduates for the Labor Market in the GCC Countries," Working Papers WR-742, RAND Corporation.
    7. Janzen, Katrin & Panitz, Robert & Glückler, Johannes, 2022. "Education premium and the compound impact of universities on their regional economy," Research Policy, Elsevier, vol. 51(1).
    8. Joël MACHADO, 2012. "On the welfare impacts of an immigration amnesty," LIDAM Discussion Papers IRES 2012010, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    9. McGuinness, Seamus & Kelly, Elish & Pham Thi Thu, Phuong & Ha Thi Thu, Thuy, 2015. "Returns to Education and the Demand for Labour in Vietnam," Papers WP506, Economic and Social Research Institute (ESRI).
    10. Lopes, Margarida, 2011. "Education, vocational training and R&D: towards new forms of labor market regulation," MPRA Paper 32412, University Library of Munich, Germany.
    11. Pérez, Javier J. & Giordano, Raffaela & Depalo, Domenico & Coutinho Pereira, Manuel & Eugène, Bruno & Papapetrou, Evangelia & Reiss, Lukas & Roter, Mojca, 2011. "The public sector pay gap in a selection of Euro area countries," Working Paper Series 1406, European Central Bank.
    12. Uli KLEINWECHTER, 2010. "A Utility Function Based Approach Towards the Modeling of Migration in Village Equilibrium Models," EcoMod2010 259600092, EcoMod.
    13. Marcus Hagedorn & Iourii Manovskii & Sergiy Stetsenko, 2016. "Taxation and Unemployment in Models with Heterogeneous Workers," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 19, pages 161-189, January.
    14. Mateusz Pipien & Sylwia Roszkowska, 2015. "Returns to skills in Europe – same or different? The empirical importance of the systems of regressions approach," NBP Working Papers 226, Narodowy Bank Polski.
    15. Hipólito Simón, 2009. "La desigualdad salarial en España: Una perspectiva internacional y temporal," Investigaciones Economicas, Fundación SEPI, vol. 33(3), pages 439-471, September.
    16. Raffaela Giordano & Manuel Coutinho Pereira & Domenico Depalo & Bruno Eugène & Evangelia Papapetrou & Javier J. Pérez & Lukas Reiss & Mojca Roter, 2014. "The Public Sector Pay Gap in a Selection of Euro Area Countries in the Pre-crisis Period," Hacienda Pública Española / Review of Public Economics, IEF, vol. 214(3), pages 11-34, September.
    17. Petra Sauer & Philippe Van Kerm & Daniele Checchi, 2023. "Higher Education Expansion & Labour Income Inequality in High-income Countries: A Gender-specific Perspective," LIS Working papers 837, LIS Cross-National Data Center in Luxembourg.
    18. Hervé Boulhol & Laure Turner, 2009. "Employment-Productivity Trade-off and Labour Composition," OECD Economics Department Working Papers 698, OECD Publishing.
    19. Alejandro García-Pozo & José Luis Sánchez-Ollero & Andrés Marchante-Mera, 2014. "Educational Mismatch and Returns on Human Capital in the Spanish Hospitality and Travel Agency Sectors," Tourism Economics, , vol. 20(2), pages 337-353, April.

    More about this item

    Keywords

    educational attainment; enquête auprès des ménages; expérience sur le marché du travail; household survey; labour market experience; Mincer equation; niveau d’instruction; primes salariales; Rendements de l’éducation; returns to education; Wage premium; équation de Mincer;
    All these keywords.

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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