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Do Literacy and Numeracy Pay Off? On the Relationship between Basic Skills and Earnings

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  • Antoni, Manfred

    () (Institute for Employment Research (IAB), Nuremberg)

  • Heineck, Guido

    () (University of Bamberg)

Abstract

Is there a reward for basic skills in the German labor market? To answer this question, we examine the relationship between literacy, numeracy and monthly gross earnings of full-time employed workers. We use data from the ALWA survey, augmented by test scores on basic cognitive skills as well as administrative earnings data. Our results indicate that earnings are positively related to both types of skills. There furthermore is no evidence for non-linearity in this relationship and only little heterogeneity when differentiating by sub-groups.

Suggested Citation

  • Antoni, Manfred & Heineck, Guido, 2012. "Do Literacy and Numeracy Pay Off? On the Relationship between Basic Skills and Earnings," IZA Discussion Papers 6882, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp6882
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    Cited by:

    1. Cain Polidano & Chris Ryan, 2016. "What Happens to Students with Low Reading Proficiency at 15? Evidence from Australia," Melbourne Institute Working Paper Series wp2016n33, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    2. Lena Dräger & Christian R. Proaño, 2015. "Cross-Border Banking and Business Cycles in Asymmetric Currency Unions," Macroeconomics and Finance Series 201501, University of Hamburg, Department of Socioeconomics.
    3. Herold, Florian & Kuzmics, Christoph, 2016. "The evolution of taking roles," BERG Working Paper Series 115, Bamberg University, Bamberg Economic Research Group.
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    6. Schmitt, Noemi & Westerhoff, Frank, 2015. "Evolutionary competition and profit taxes: market stability versus tax burden," BERG Working Paper Series 104, Bamberg University, Bamberg Economic Research Group.
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    8. Schmitt, Noemi & Tuinstra, Jan & Westerhoff, Frank, 2017. "Side effects of nonlinear profit taxes in an evolutionary market entry model: Abrupt changes, coexisting attractors and hysteresis problems," Journal of Economic Behavior & Organization, Elsevier, vol. 135(C), pages 15-38.
    9. March, Christoph & Sahm, Marco, 2017. "Asymmetric discouragement in asymmetric contests," Economics Letters, Elsevier, vol. 151(C), pages 23-27.
    10. Fatoke Dato, Mafaizath A., 2015. "Impact of income shock on children’s schooling and labor in a West African country," MPRA Paper 64317, University Library of Munich, Germany.
    11. Fatoke-Dato, Mafaïzath A., 2015. "Impact of an educational demand-and-supply policy on girls' education in West Africa: Heterogeneity in income, school environment and ethnicity," BERG Working Paper Series 101, Bamberg University, Bamberg Economic Research Group.
    12. González-Díaz, Julio & Herold, Florian & Domínguez, Diego, 2016. "Strategic sequential voting," BERG Working Paper Series 113, Bamberg University, Bamberg Economic Research Group.
    13. Bexheti, Abdylmenaf & Mustafi, Besime, 2015. "Impact of public funding of education on economic growth in Macedonia," BERG Working Paper Series 98, Bamberg University, Bamberg Economic Research Group.
    14. Proaño, Christian R. & Lojak, Benjamin, 2015. "Debt stabilization and macroeconomic volatility in monetary unions under heterogeneous sovereign risk perceptions," BERG Working Paper Series 106, Bamberg University, Bamberg Economic Research Group.
    15. Seregi, János & Lelovics, Zsuzsanna & Balogh, László, 2012. "The social welfare function of forests in the light of the theory of public goods," BERG Working Paper Series 87, Bamberg University, Bamberg Economic Research Group.

    More about this item

    Keywords

    literacy; numeracy; earnings; administrative data; Germany; ALWA;

    JEL classification:

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

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