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

25 Pages Posted: 7 Oct 2012

See all articles by Manfred Antoni

Manfred Antoni

Institute for Employment Research (IAB)

Guido Heineck

University of Bamberg; IZA Institute of Labor Economics


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.

Keywords: literacy, numeracy, earnings, administrative data, Germany, ALWA

JEL Classification: I21, J31

Suggested Citation

Antoni, Manfred and Heineck, Guido, Do Literacy and Numeracy Pay Off? On the Relationship between Basic Skills and Earnings. IZA Discussion Paper No. 6882. Available at SSRN:

Manfred Antoni (Contact Author)

Institute for Employment Research (IAB) ( email )

Regensburger Str. 104
Nuremberg, 90478

Guido Heineck

University of Bamberg

Feldkirchenstr. 21
Bamberg, 96052

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072

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