Wage Differentials And Educational Attainment In Germany. How Do Job Profiles Affect Earnings?

This paper presents the results of an empirical analysis on the issue of wage differentials occurring within education levels. The main purpose of the research is to investigate the extent to which job profiles, classified as routine and non-routine tasks can explain wage differentials within educational levels in Germany. Systematization of the literary sources and approaches for solving the problem of wage differentials indicates that in line with technological advancement witnessed over the past decades, earnings are largely determined by the nature of tasks carried out within the workplace. The relevance of this scientific problem decision is that educational systems have to keep up with advancing digitization and the rapidly changing labour market requirements. Investigation of the impact job profiles have on earnings, in the paper is carried out in the following logical sequence: firstly, a brief overview on previous research in the field is given, followed by an outline of the dataset analysed, proposed hypotheses, applied methodology and results concluding with a discussion. Methodological tools of the research methods were descriptive statistics along with OLS regression techniques. Based on German cross-sectional employee survey data from 2018 two hypotheses are tested by classifying 23 selected work activities into routine and non-routine tasks linked to the highest education level attained. In accordance with the German education system four educational levels are specified: no occupational degree, in-company or school-based vocational training, advanced vocational training degree and university degree. The results indicate that non-routine activities are on average remunerated at a higher rate compared to routine activities and non-routine analytical work is paid at a higher rate than non-routine craftmanship. Additionally, higher wages for computer assisted work activities is found. The OLS regression model results confirm both hypotheses implying increasing returns to educational attainments resulting in larger hourly pay and higher pay for those performing non-routine tasks. Pursuant to the traditional Mincer human capital approach on returns to schooling the research empirically confirms higher wages for employees completing advanced vocational training and those holding a university degree. The results of the research can be useful for policymakers in the education sector, fostering and improving analytical, data literacy and organizational skills.