An empirical examination of the relationship between wages and education

Abstract

Education is a human right that allow people to develop their skills, improve their productivity and their living conditions. Education has long been recognized as an important foundation for sustained economic growth. Using data from the OECD Programme for International Assessment of Adult Competencies (PIAAC), we empirically investigate the economic effects of education in Spain. Our data source allow us to perform international comparisons and we estimate wage equations for three other European countries: France, the Netherlands and Norway. Another advantage of the PIAAC dataset is the availability of cognitive skills indices. We use these indices as proxy variables for the unobserved ability of workers. Based on these data, our estimates show a strong positive relationship between education and wages.