Indicator A4. What are the earnings advantages from education?
On average, 25-34 year-olds with vocational upper secondary or post-secondary non-tertiary attainment working full-time and for the full year earn the same as their peers with a general qualification across OECD countries. But the gap widens among 45-54 year-olds, often in favour of those with a general qualification in most countries with available data.
Although vocational programmes prepare students for their first job, better earnings prospects can be one of the incentives for them to continue their studies at tertiary level. On average across OECD countries, younger adults who attained bachelor’s or equivalent education earn 29% more than those with vocational upper secondary or post-secondary non-tertiary attainment while those who attained short-cycle tertiary education earn on average 13% more.
Among younger full-time full-year workers with upper secondary or post-secondary non-tertiary attainment, the gender pay gap is wider for those with a vocational qualification than a general one. On average across OECD countries, younger women with vocational qualification working full-time for the full year earn 80% of their male peers’ earnings, while for younger women with a general qualification the figure is 84%.
Context
Higher levels of education usually translate into better employment opportunities (see Indicator A3) and higher earnings. Combined with other social benefits, the potential to earn more, and see those earnings increase over time, is an important incentive for individuals to pursue education and training.
The earnings advantage from educational attainment can vary according to age, gender, programme orientation and field of study. Another important factor affecting income, besides education level, is participation in hours (e.g., part-time workers usually earn less not only in absolute terms but also relatively in terms of hourly earnings). Individuals with higher qualifications and more time in the labour force are more likely to have higher income. However, in all countries, gender gaps in earnings persist regardless of age, level of education, and programme orientation.
Other factors also affect individuals’ earnings and contribute to differences in the distribution of earnings: the demand for skills in the labour market, the supply of workers and their skills, the minimum wage and other labour-market legislation, and countries’ structures and practices (such as the strength of labour unions, the coverage of collective-bargaining agreements and the quality of working environments).
Other findings
Among tertiary-educated workers, the earnings advantages tend to increase with the level of tertiary attainment. In most OECD, partner and accession countries, full-time full-year workers with a master’s or doctoral or equivalent degree earn more than those with a bachelor’s or equivalent degree, who in turn earn more than those with a short-cycle tertiary degree.
In almost all OECD, partner and accession countries, gender differences in earnings increase between 25-34 year-olds and 45-54 year-olds. Among full-time full-year 45-54 year-old workers, women earn around three-quarters of men’s earnings, regardless of educational attainment and programme orientation. And 25-34 years-old women earn around 20 percentage points less than men.
Around one in four tertiary-educated adults working both full-time and part-time earn more than twice overall median earnings, on average across OECD countries. At the other extreme, one-third of workers with below upper secondary attainment do not receive half the median on average.
Note
The analysis presents three types of relative earnings: 1) using the earnings of workers with upper secondary education as the baseline; 2) using below upper secondary attainment as the baseline; and 3) using male workers’ earnings as the baseline. Baselines 1 and 3 have been used in previous editions of Education at a Glance (EAG), and this edition uses baseline 2 to compare earnings outcomes by programme orientation at upper secondary or post-secondary non-tertiary level.
In all cases, given the focus on relative earnings, any increase or decrease in the results could reflect a change in the interest group (numerator) or in the baseline group (denominator). It is recommended readers consider actual earnings in Tables X3.A4.4 and X3.A4.5 from Education at a Glance 2023 Sources, Methodologies and Technical Notes,) when interpreting relative earnings.
Due to the difference in survey methods used to gather data from countries, the analysis of relative earnings is based on full-time full-year workers to ensure better comparability across countries. Refer to Education at a Glance 2023 Sources, Methodologies and Technical Notes, for more information on the survey methods. Data on relative earnings for all workers (full- and part-time) are available for consultation on line (OECD, 2023[2]).
Relative earnings compared to workers with below upper secondary attainment
Higher levels of educational attainment in general lead to greater earnings. Adults (25-64 year-olds) in OECD countries with upper secondary or post-secondary non-tertiary attainment working full-time and for the full year earn on average about one-quarter more than those without such qualifications. The difference is over 40% in Chile, Colombia, the Czech Republic and Germany whereas in Finland, workers with upper secondary or post-secondary non-tertiary attainment earn almost the same as those with below upper secondary attainment (Table A4.4).
The premium for completing a tertiary degree is much higher. Full-time full-year tertiary-educated adult workers earn almost twice as much as those with below upper secondary attainment on average across OECD countries. Country differences also widen when looking at the relative earnings associated with tertiary attainment. The earnings advantage for tertiary-educated workers is less than 40% in Denmark, Finland and New Zealand, but it can be over three times the earnings of workers with below upper secondary attainment in Brazil, Chile and Colombia (Table A4.4).
Among tertiary-educated workers, the earnings advantage tends to increase with the level of tertiary attainment. In most OECD, partner and accession countries, full-time full-year workers with a master’s or doctoral or equivalent degree earn more than those with a bachelor’s or equivalent degree, who in turn earn more than those with a short-cycle tertiary degree. On average across OECD countries, adults with a short-cycle tertiary degree earn 51% more than those with below upper secondary attainment. The earnings advantage increases to 76% for those with a bachelor’s or equivalent degree and more than doubles (133%) for those with a master’s or doctoral or equivalent degree. Austria, Greece and Norway are the exceptions from the general pattern, with the earnings advantage for workers with a short-cycle tertiary degree more than 10 percentage points higher than for those with a bachelor’s or equivalent degree (Table A4.4).
Earnings differences by programme orientation
Vocational programmes are often designed to prepare learners for entry into the labour market. Younger adults (25-34 year-olds) with vocational upper secondary or post-secondary non-tertiary attainment have higher employment rates than their peers with a general qualification in nearly all OECD, partner and accession countries (see Indicator A3). But these higher employment rates are not usually associated with greater earnings advantages. In more than half of OECD, partner and accession countries with available data, younger adults with a general upper secondary or post-secondary non-tertiary attainment earn more than those with vocational attainment at the same level. Although the difference in earnings is small or even negligible in most cases, it is over 10% in Latvia, Luxembourg and the United Kingdom. In contrast, younger adults with a vocational upper secondary or post-secondary non-tertiary attainment earn at least 10% more than their peers with a general qualification in the Czech Republic and Norway and this difference reaches almost 30% in Canada (Figure A4.1). It should be noted that in Canada, with the exception of Quebec, there is no distinct vocational track at upper secondary level and so such occupational preparation starts at post-secondary non-tertiary level (see Indicator A1). The earnings advantage from vocational qualifications in Canada is therefore not fully comparable with any advantages in other countries where upper secondary vocational attainment is the common standard.
While vocational programmes prepare students for a first job, they also often provide progression opportunities to higher levels of education. Most upper secondary vocational education and training (VET) students pursue programmes that lead to full level completion with access to short-cycle tertiary or bachelor’s or equivalent levels (see Indicator B1). The resulting higher earnings could be one of the incentives for VET students to continue their studies at tertiary level.
On average across OECD countries, younger adults who attained short-cycle tertiary education earn 13% more than those with vocational upper secondary or post-secondary non-tertiary attainment. The earnings advantage is greatest in Latvia (50%) and the United Kingdom (31%). Canada is the only country where younger adults with short-cycle tertiary attainment earn less than those with vocational upper secondary or post-secondary non-tertiary attainment (Table A4.4).
The earnings advantage from completing a bachelor’s or equivalent degree is even higher. On average, younger adults with a bachelor’s or equivalent degree earn 29% more than those with vocational upper secondary or post-secondary non-tertiary attainment across OECD countries. In Latvia, Spain and the United Kingdom, the earnings advantage is around 50%, while in Chile, younger adults with a bachelor’s or equivalent degree earn more than twice the earnings of those vocational upper secondary or post-secondary non-tertiary attainment (Figure A4.1 and Table A4.4). Interpretation of these results needs to consider the size of the VET sector in the country but also the fields targeted by vocational programmes (see Indicators A1 and B5).
Earnings differences across age groups
Earnings differences by educational attainment tend to widen among older workers. On average across OECD countries, 25-34 year-olds with upper secondary or post-secondary non-tertiary education earn 21% more than their peers with below upper secondary attainment while 45-54 year-olds earn 26% more. Among tertiary-educated adults, 25-34 year-olds earn 66% more than those with below upper secondary attainment and the earnings advantage is more than twice as much among 45-54 year-olds (Table A4.4).
In about one-third of OECD, partner and accession countries with available data, the earnings advantage from attaining a vocational upper secondary or post-secondary non-tertiary education over those with below upper secondary attainment is higher for 25-34 year-olds than for 45-54 year-olds. This is particularly acute in Latvia and Luxembourg, where 45-54 year-olds with a vocational upper secondary or post-secondary non-tertiary attainment earn even considerably less than their peers without an upper secondary qualification. In the remaining two-third of countries, the earnings advantage of 45-54 year-olds with vocational upper secondary or post-secondary non-tertiary attainment is often no more than 40% higher than for those with below upper secondary attainment. Only in Canada, Chile and the Czech Republic do 45-54 year-olds with vocational upper secondary or post-secondary non-tertiary attainment earn around 1.5 times the earnings of their peers with below upper secondary attainment (Figure A4.2).
While the earnings difference by programme orientation is small or even negligible among younger adults in most OECD, partner and accession countries, the gap widens among 45-54 year-olds, usually in favour of those with a general qualification. On average across OECD countries, 45-54 year-olds with vocational upper secondary or post-secondary non-tertiary attainment earn 6% less than those with a general qualification. This difference is about 40% in Finland and Luxembourg and is still above 10% in favour of those with a general qualification in Austria, Denmark, Germany, Latvia, the Netherlands and the United Kingdom (Table A4.4). However, adults with general upper secondary or post-secondary non-tertiary attainment represent a small part of the population (see Indicator A1), while vocational qualifications are more common at these levels. Also employment rates are higher among those with vocational upper secondary or post-secondary non-tertiary attainment than among their peers with a general qualification (see Indicator A3).
In contrast, in Brazil, Canada and the Czech Republic, 45-54 year-olds with a vocational qualification earn at least 10% more than those with a general qualification (Table A4.4). It should be noted that the design of vocational programmes has probably changed over time. Caution is needed when comparing earnings outcomes by programme orientation between age groups as they do not necessarily provide a good indication of the lifetime earnings prospects of today’s young adults.
Gender disparities in earnings, by educational attainment, programme orientation and age group
Although increasing educational attainment narrows gender differences in employment rates (see Indicator A3), the gender gap in earnings does not vary much across educational attainment levels. On average across OECD countries, tertiary-educated younger women working full-time and for the full year earn 84% of the earnings of their male peers, compared to 81% for those with upper secondary or post-secondary non-tertiary attainment and 82% for those with below upper secondary attainment (Table A4.3). As women are more likely to work part-time and/or part year than men, the gender differences in earnings are wider among all workers than among full-time full-year workers (OECD, 2023[3]).
Among full-time full-year younger workers with upper secondary or post-secondary non-tertiary attainment, the gender pay gap is wider for those with a vocational qualification than a general one. On average across OECD countries, younger women with vocational upper secondary or post-secondary non-tertiary attainment earn 80% of what their male counterparts earn, while those with a general qualification earn 84%. In Canada, France and the United Kingdom, younger women with a vocational qualification earn less than two-thirds of their male counterparts’ earnings, but the gender pay gap narrows by over 20 percentage points for those with a general qualification (Figure A4.3). Gender differences in the choice of field of study in VET are large. Recent research shows that women learners are heavily under-represented not only in engineering, manufacturing and construction, but also in information and communication technologies fields. These gender differences in field of study will translate into different occupational patterns and may explain the wider gender pay gap by programme orientation (OECD, 2023[2]).
In almost all OECD, partner and accession countries, gender differences in earnings increase with age. Among 45-54 year-olds working full-time for the full year, women’s earnings are around three-quarters of men’s, regardless of educational attainment and programme orientation. Costa Rica is the only country where 45-54 year-old women with tertiary attainment earn more, about one-fifth more than their male counterparts (Table A4.3). Recent studies have found that the growing gender pay gap largely reflects differences in job mobility. Women are less likely than men to be promoted or to get considerable raises in wages when they change employers. Moreover, career breaks for women around the age of childbirth remains an important contributor to wage differences between men and women in many OECD countries (OECD, 2022[4]).
Distribution of earnings among full- and part-time workers, by educational attainment
Another way to measure the earnings difference by educational attainment is to look at the distribution of earnings. These data show the degree to which earnings centre around a country’s overall median earnings. Median earnings are calculated based on the earnings of all workers (including full-time and part-time workers), without adjusting for differences in hours worked. While the relative earnings data concentrate on full-time full-year workers for better comparability, the distribution of earnings among all adults with earnings from employment complements the findings above on relative earnings by providing a wider picture of earnings differences across countries.
The likelihood of earning above the overall median increases with educational attainment. On average across OECD countries, 26% of full- and part-time workers with below upper secondary attainment earn more than the median, compared to 43% of those with upper secondary or post-secondary non-tertiary educational attainment. This share reaches 69% among workers with a tertiary degree (OECD, 2023[3]).
The differences are greater when looking at the share of workers earning more than twice the median. Across OECD countries, an average of 24% of tertiary-educated workers earn more than twice the median, compared to only 7% of those with upper secondary or post-secondary non-tertiary attainment and 3% of those with below upper secondary attainment (Figure A4.4 and Table A4.2).
Among tertiary-educated workers, the distribution of earnings can vary considerably depending on the level of tertiary attainment. In nearly all OECD and partner countries, the share of workers earning more than twice the median increases at each level from short-cycle tertiary to bachelor’s or equivalent and master’s or doctoral or equivalent degrees. On average across OECD countries, 13% of workers with a short-cycle tertiary degree as their highest level of education earn more than twice the median. The share increases to 20% among those with bachelor’s or equivalent attainment and to 34% among those with a master’s or doctoral or equivalent degree. Austria, Denmark, Greece, Norway and the Slovak Republic are the only exceptions where adults who attained short-cycle tertiary qualification are more likely to earn twice above the median than those who attained a bachelor’s or equivalent degree (Figure A4.4 and (OECD, 2023[3])). For Austria and Norway, this is probably linked to the popularity of broad field of science, technology, engineering and mathematics (STEM) among new entrants to short-cycle tertiary education (see Indicator B4).
Less educated adults are more likely to earn less than half the country median than those with higher levels of educational attainment. The recent rise in the cost of living is undermining purchasing power for everyone but has a disproportionate impact on low-paid workers, who are often those with relatively low educational attainment. Workers situated at the lower end of the earnings distribution may struggle to keep up with inflation especially in countries where minimum wages are low relative to the median (OECD, 2022[5]; Balestra, C., D. Hirsch and D. Vaughan-Whitehead, 2023[6]). On average across OECD countries, about one-third of workers with below upper secondary attainment earn at or below half the median, compared to 18% of workers with upper secondary or post-secondary non-tertiary and 10% of tertiary-educated workers. The share of workers with below upper secondary attainment earning less than half the median also varies substantially across OECD, partner and accession countries, ranging from highs of 61% in Brazil and 52% in Norway to less than 1% in Poland and Slovenia (Table A4.2).
Adults refer to 25-64 year-olds; younger adults refer to 25-34 year-olds.
Educational attainment refers to the highest level of education successfully completed by an individual.
Levels of education: See the Reader’s Guide at the beginning of this publication for a presentation of all International Standard Classification of Education (ISCED) 2011 levels.
Individuals with zero earnings refer to individuals who have earnings, but the result of their business activities is exactly zero.
Individuals with negative earnings refer to individuals who reported deficits in their business activities.
Vocational programmes: The International Standard Classification of Education (ISCED 2011) defines vocational programmes as education programmes that are designed for learners to acquire the knowledge, skills and competencies specific to a particular occupation, trade, or class of occupations or trades. Such programmes may have work-based components (e.g. apprenticeships and dual-system education programmes). Successful completion of such programmes leads to vocational qualifications relevant to the labour market and acknowledged as occupationally oriented by the relevant national authorities and/or the labour market.
The analysis of relative earnings of the population with specific educational attainment and of the distribution of earnings does not control for hours worked, although the number of hours worked is likely to influence earnings in general and the distribution in particular. For the definition of full-time earnings, countries were asked whether they had applied a self-designated full-time status or a threshold value for the typical number of hours worked per week.
Earnings data are based on an annual, monthly or weekly reference period, depending on the country. This Indicator presents annual data, and earnings data with a reference period shorter than a year are adjusted. Please refer to Table X3.A4.1 in (OECD, 2023[1]) Education at a Glance 2023 Sources, Methodologies and Technical Notes, for more information on the adjustment methods. Data on earnings are before income tax for most countries. Earnings of self-employed people are excluded for many countries and, in general, there is no simple and comparable method to separate earnings from employment and returns to capital invested in a business.
This indicator does not take into consideration the impact of effective income from free government services. Therefore, although incomes could be lower in some countries than in others, the state could be providing both free health care and free schooling, for example. The total average for earnings (men plus women) is not the simple average of the earnings figures for men and women. Instead, it is the average based on earnings of the total population. This overall average weights the average earnings separately for men and women by the share of men and women with different levels of educational attainment.
In the earnings data, individuals with zero and/or negative earnings should be reported as earners. Individuals with negative earnings should also be taken into account in the calculation of the overall median earnings. However, data on individuals with zero and/or negative earnings are not available for all countries. Individuals with zero earnings are included for Belgium, Brazil, Canada, Germany, Ireland, New Zealand, Norway, Sweden, Switzerland, the Republic of Türkiye (hereafter Türkiye) and the United States. Individuals with negative earnings are included for Belgium, Canada, Denmark, Italy, New Zealand, Norway, Spain, Sweden and the United States. Refer to the Definitions section for the definition of individuals with zero and negative earnings. Note that the share of both zero and negative earners are very low among full-time full-year workers in countries with available data, and this finding holds true when looking at the breakdown by educational attainment levels. The impact of the inclusion/exclusion of zero and/or negative earners is negligible on the relative earnings and the distribution of earnings.
For more information see the OECD Handbook for Internationally Comparative Education Statistics (OECD, 2018[7]) and Education at a Glance 2023 Sources, Methodologies and Technical Notes (OECD, 2023[1]).
This indicator is based on the data collection on education and earnings by the OECD Labour Market and Social Outcomes of Learning Network (LSO Network). The data collection takes account of earnings for individuals working full-time and full year, as well as part-time or part year, during the reference period. This database contains data on dispersion of earnings from work and on student earnings versus non-student earnings. The source for most countries is national household surveys such as Labour Force Surveys, the European Union Statistics on Income and Living Conditions (EU-SILC), or other dedicated surveys collecting data on earnings. About one-quarter of countries use data from tax or other registers. Please see (OECD, 2023[1]) Education at a Glance 2023 Sources, Methodologies and Technical Notes, for country-specific notes on national sources.
References
[6] Balestra, C., D. Hirsch and D. Vaughan-Whitehead (2023), “Living wages in context: A comparative analysis for OECD countries”, OECD Papers on Well-being and Inequalities, No. 13, OECD Publishing, Paris, https://doi.org/10.1787/2e622174-en.
[3] OECD (2023), Education and earnings, http://stats.oecd.org/Index.aspx?datasetcode=EAG_EARNINGS.
[1] OECD (2023), Education at a Glance 2023 Sources, Methodologies and Technical Notes, OECD Publishing, Paris, https://doi.org/10.1787/d7f76adc-en.
[2] OECD (2023), Joining Forces for Gender Equality: What is Holding us Back?, OECD Publishing, Paris, https://doi.org/10.1787/67d48024-en.
[5] OECD (2022), OECD Employment Outlook 2022: Building Back More Inclusive Labour Markets, OECD Publishing, Paris, https://doi.org/10.1787/1bb305a6-en.
[4] OECD (2022), Same skills, different pay: Tackling gender inequalities at firm level, OECD, Paris, https://www.oecd.org/gender/same-skills-different-pay-2022.pdf.
[7] OECD (2018), OECD Handbook for Internationally Comparative Education Statistics: Concepts, Standards, Definitions and Classifications, OECD Publishing, Paris, https://doi.org/10.1787/9789264304444-en.
Cut-off date for the data: 15 June 2023. Any updates on data can be found on line at: https://doi.org/10.1787/eag-data-en. More breakdowns can also be found at http://stats.oecd.org, Education at a Glance Database.
Table A4.1. Relative earnings of workers compared to those with upper secondary attainment, by educational attainment and age group (2021) |
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Adults with income from employment (full-time full-year workers); upper secondary attainment for each age group = 100 |
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Note: See StatLink and Box A4 1 for the notes related to this Table. |
Source: OECD/ILO/UIS (2023). For more information see Source section and Education at a Glance 2023 Sources, Methodologies and Technical Notes (OECD, 2023[1]). |
Table A4.2. Distribution of workers by educational attainment and level of earnings relative to the median (2021) |
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Median earnings from work for 25-64 year-olds with income from employment (full- and part-time workers) for all levels of educational attainment |
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Note: See StatLink and Box A4 1 for the notes related to this Table. |
Source: OECD/ILO/UIS (2023). For more information see Source section and Education at a Glance 2023 Sources, Methodologies and Technical Notes (OECD, 2023[1]). |
Table A4.3. Women’s earnings as a percentage of men's earnings, by educational attainment, programme orientation and age group (2021) |
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Average earnings of adults with income from employment (full-time full-year workers) |
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Note: See StatLink and Box A4 1 for the notes related to this Table. |
Source: OECD/ILO/UIS (2023). For more information see Source section and Education at a Glance 2023 Sources, Methodologies and Technical Notes (OECD, 2023[1]).. |
Table A4.4. Relative earnings of workers compared to those with below upper secondary attainment, by educational attainment, programme orientation and age group (2021) |
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Adults with income from employment (full-time full-year workers); below upper secondary attainment for each age group = 100 |
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Note: See StatLink and Box A4 1 for the notes related to this Table. |
Source: OECD/ILO/UIS (2023). For more information see Source section and Education at a Glance 2023 Sources, Methodologies and Technical Notes (OECD, 2023[1]).. |
Table A4.1. Relative earnings of workers compared to those with upper secondary attainment, by educational attainment and age group (2021)
There are cross-country differences in the inclusion/exclusion of zero and negative earners. Relative earnings for workers with upper secondary attainment are available for consultation on line (see StatLink).
1. Year of reference differs from 2021: 2020 for Belgium, Bulgaria, Canada, Colombia, the Czech Republic, Finland, Ireland, Israel, Italy, Poland and Spain; 2019 for France; 2018 for Greece, Mexico and Lithuania; 2017 for Chile.
2. Index 100 refers to the combined ISCED levels 3 and 4 in the ISCED 2011 classification. See the Reader’s Guide for the list of ISCED levels.
Table A4.2. Distribution of workers by educational attainment and level of earnings relative to the median (2021)
There are cross-country differences in the inclusion/exclusion of zero and negative earners. For a given level of educational attainment, the figures by level of earnings relative to median earnings may not add up to 100% because of missing data.
1. Earnings net of income tax.
2. Year of reference differs from 2021: 2020 for Bulgaria, Canada, Colombia, the Czech Republic, Finland, Ireland, Israel, Italy, Poland and Spain; 2019 for France; 2018 for Greece, Mexico and Lithuania; 2017 for Chile.
Table A4.3. Women’s earnings as a percentage of men's earnings, by educational attainment, programme orientation and age group (2021)
There are cross-country differences in the inclusion/exclusion of zero and negative earners.
1. Year of reference differs from 2021: 2020 for Belgium, Bulgaria, Canada, Colombia, the Czech Republic, Finland, Ireland, Israel, Italy, Poland and Spain; 2019 for France; 2018 for Greece, Mexico and Lithuania; 2017 for Chile.
2. Earnings net of income tax.
Table A4.4. Relative earnings of workers compared to those with below upper secondary attainment, by educational attainment, programme orientation and age group (2021)
There are cross-country differences in the inclusion/exclusion of zero and negative earners. Relative earnings for workers with below upper secondary attainment are available for consultation on line (see StatLink).
1. Year of reference differs from 2021: 2020 for Belgium, Bulgaria, Canada, Colombia, the Czech Republic, Finland, Ireland, Israel, Italy, Poland and Spain; 2019 for France; 2018 for Greece, Mexico and Lithuania; 2017 for Chile.
2. Earnings net of income tax.
For more information see Definitions, Methodology and Source sections and Education at a Glance 2023 Sources, Methodologies and Technical Notes (OECD, 2023[1]).
Data and more breakdowns are available in the Education at a Glance Database (http://stats.oecd.org/).
Please refer to the Reader's Guide for information concerning symbols for missing data and abbreviations.