Returns to Educational Degrees on the Labor Market

Earnings Returns to Educational Degrees over the Life Course

Education is an investment: it costs time, effort, and money. But be it an apprenticeship, master craftsmanship, or university degree: the costs of education pay off. The bottom line of our study for Germany is that each higher level of qualification yields between 22 and 64 percent higher income over the entire working life. Over their entire career, individuals with an apprenticeship degree earn 143,000 Euro more than those without a professional degree. A master craftsmanship yields 129,000 Euro more than an apprenticeship, a degree from a University of Applied Sciences 267,000 Euro, and a university degree 387,000 Euro. But there are large differences by field of study both for apprenticeship and university degrees – for instance between medical studies and social work.

The Economic Case for Education

A compelling economic case for education emerges from encompassing research on the large economic returns to education. Of course, the case for education can be made from many perspectives. Education can empower people to be independent citizens and participate in society, promote civic awareness and and social cohesion, and increase health consciousness. But if you like it or not, education also plays a crucial role for individual and societal economic prosperity. The knowledge and skills of the population are a leading determinant of economic growth, employment, and earnings. It would thus be irresponsible to ignore the economic role of education. This would be just as misguided as viewing education exclusively from an economic perspective. Ignoring the economic dimension of education would endanger the prosperity of future generations, with widespread consequences for unemployment, poverty, social exclusion, and the financial sustainability of social security systems.

Two-pager:

The Economic Case for Education. EENEE Policy Brief 5/2014

Here you can learn more about my research on this topic.

A survey paper on the topic is:

The Economic Case for Education. Education Economics 24 (1): 3-32, 2016

Additional material is available in German.