Role of education as determinant of earning differences in labour market

Education is one of the elements that have an important role in the process of economic growth and development. In the human capital theory, differences in human capital accumulation among employees are shown as one of the reasons for wage differences. Education, which is accepted as human capital accumulation, is one of the factors that determine wage levels and differences in the labor market. Differences in education and wage levels are also investigated in the Mincer Earnings Model, which has an important place in the labor market literature on wages. This model states that the effect of education on earnings is positive. In this study, the effect of the education year on wages was examined using the Mincer Earnings Model. Within the scope of the study, the estimation of the earnings function was carried out by using the section data of the Household Budget Statistics micro data set in the years between 2011 and 2019. The least squares method, the semiparametric regression method and the semiparametric regression method which takes into account the endogeneity were used as the estimation method. In the current study, the control function approach was used as the instrumental variable method. The achieved findings of the study show that the education year positively affects the wage level in all three estimation methods in the mentioned periods. Semiparametric regression estimation results show that this effect is higher for each year, especially after a certain period. The control function approach states that this effect is negative in some periods and positive in others. When all years are considered, it is concluded that there is an effect with a positive trend.