The Wage Premium on Tertiary Education: New Estimates for 21 OECD Countries
OECD Journal: Economic Studies, Vol. 2009, pp. 183-210, 2009
29 Pages Posted: 9 Jun 2011
Date Written: December 16, 2009
This article presents cross-section estimates of gross hourly wage premia on tertiary education. The estimates are based on a unified framework for 21 OECD countries from the 1990s to the early 2000s and use international household surveys to maximize cross-country 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.
Keywords: wage premium, mincer equation, returns to education, educational attainment, household survey, labour market experience
JEL Classification: I21, I22, J31
Suggested Citation: Suggested Citation