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Education and the Labour Market

Labour Market Earnings

Earnings are an indicator of the value of skills on the labour market. Therefore, it is useful to look at the level as well as at the distribution of earnings in respect to education. According to the human capital theory, people invest in education in order to enhance their future earnings. Thus, one can estimate a so-called "return" to educational investment, that takes into account the costs and the benefits of education. Doing so, one can assess the labour market value of the various types and levels of education.

The questions that are typically examined in this field are:

  • Does education pay off in terms of earnings?
  • What is the labour market value of different types and levels of general and vocational education?
  • How do unemployment and labour force non-participation periods affect the return to education?
  • Are there any changes over time?
  • Are there any differences across groups of workers, e.g. men and women, employed and self-employed, public and private sector?
  • More generally, is there heterogeneity in the returns to education?

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