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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 of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp6882
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    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.
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    More about this item

    Keywords

    literacy; numeracy; earnings; administrative data; Germany; ALWA;
    All these keywords.

    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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