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Counting what counts: Wage returns to numeracy using register-linked Norwegian PIAAC data
Jannike Gottschalk Ballo, NIFU - Nordic Institute for Studies in Innovation, Research and Education, Norway
Otto Lillebø, NIFU - Nordic Institute for Studies in Innovation, Research and Education, Norway

Do wages reflect what people know, or what their credentials signal? This question is particularly relevant in Nordic labour markets, where compressed wage structures and coordinated bargaining are often thought to limit returns to individual skills. While human capital theory predicts that productivity-enhancing skills drive wages, most empirical research relies on education as a proxy, making it difficult to distinguish skill effects from signalling. This study uses PIAAC Cycle 2 data linked to Norwegian administrative registers to directly address this challenge. By combining detailed wage records with register-based education and school grades, and survey-based measures of numeracy, we can observe multiple dimensions of competence within the same individuals. This linked data structure represents a key contribution, as most PIAAC-based studies rely on self-reported outcomes and cannot separate early performance, formal qualifications, and adult skills. The analysis focuses on the intensive margin and examines whether returns to numeracy depend on skill use in the workplace. We estimate Mincer-type wage regressions and complement these with a descriptive four-group analysis based on combinations of high and low numeracy and school grades. This design enables us to directly compare individuals whose formal credentials and measured skills diverge. Preliminary results show that numeracy has a substantial independent association with wages. A one standard deviation increase in numeracy is associated with approximately 15 percent higher wages, controlling for education. At the same time, the education premium declines markedly when skills are included and disappears when early school performance is accounted for. The four-group analysis shows that individuals with high numeracy but low grades earn as much as or more than those with strong formal credentials. Finally, the return to numeracy is largely driven by whether these skills are used in the job. These findings provide new evidence on the relative importance of skills and credentials in a coordinated labour market with compressed wage structures. By leveraging linked survey and register data, the study offers a more precise empirical separation of skill and signalling effects than previous PIAAC research. For Nordic policy debates, the results highlight that improving skill levels is not sufficient: the economic value of skills depends on how they are utilized in the labour market. This underscores the importance of both skill formation and better alignment between education, job content, and skill use.

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Educational Pathways, Work Careers, and Adult Skills: Evidence from Finnish Register Data Linked to PIAAC II
Juho Jokinen, University of Jyväskylä, Finland
Mika Haapanen, University of Jyväskylä, Finland
Joonas Mannonen, University of Jyväskylä, Finland
Kari Nissinen, University of Jyväskylä, Finland

We contribute to the literature by analysing how educational trajectories, school achievement, and labour market histories are associated with adult cognitive skills, using rich Finnish register data linked to the PIAAC II survey. We differ from previous work, particularly from studies such as Mannonen et al. (2024), by combining longitudinal administrative records on education, school performance, and employment histories with direct measures of adult literacy and numeracy. Our data consist of comprehensive Finnish population registers from 1987–2024, including detailed annual information on employment, unemployment, occupation, earnings, and educational attainment, complemented by school records on comprehensive school grades and matriculation examination results from 1990 onwards. These register data are linked to PIAAC II, enabling us to examine how early-life school performance, such as grades in language and mathematics, predicts adult literacy and numeracy skills. In addition, we analyse how educational level and field, as well as accumulated labour market experience, are associated with skills in the adulthood. The empirical analysis addresses two main research questions. First, to what extent do comprehensive school and matriculation exam grades predict (corresponding domains of) adult cognitive skills? Second, how do educational attainment, field of study, and detailed labour market histories relate to adult literacy and numeracy? By leveraging the longitudinal structure of the data, we can investigate heterogeneous educational pathways and career trajectories.
Our study provides new evidence on the role of both formal education and workplace learning in shaping basic information-processing skills in adulthood. It contributes to a more nuanced understanding of how different combinations of education and work experience are associated with skill proficiency and offers new insights into the long-term predictive power of school achievement for adult competencies.

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Presentation: To be updated



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