Wage returns to education in the four largest European economies

Rationale This article estimates the wage returns to different education levels in Germany, France, Italy and Spain by calculating the internal rates of return of tertiary education and upper secondary education and comparing them with lower secondary education. Takeaways •Employment income increases with education level. In the period 2010-2021 Germany was the country with the largest wage differential between individuals with a tertiary education and those with a lower secondary education, followed by France, Spain and Italy. •In these four countries the returns to tertiary education were over 10% higher than the returns to lower secondary education. Germany and France have the highest returns (around 20%), while Italy and Spain have lower returns (11% and 12%, respectively). •Regardless of field, the returns to long-cycle tertiary education are higher than the returns to higher vocational training. In addition, the returns to long-cycle tertiary education in the science, technology, engineering and mathematics fields are higher than in humanities. In all tertiary education specialisations, Germany stands out with the highest returns, followed by France, Spain and Italy.