The question “If you have more education, do you earn more money?” has, based on current data, a clear but incomplete answer. The relationship between skills and earnings in the labor market starts with a measurable reality: a degree still brings a substantial increase in income. According to Eurostat data on median net income (EU-SILC, 2024), in Romania, a person with a college degree earns approximately 51% more than one with a high school diploma—one of the highest premiums in Europe, where the EU average is +38% (Eurostat, EU-SILC 2024). And yet, a degree is no longer the guarantee it once was. Based on our experience with the salary benchmarks we conduct, what the market pays for is not a piece of paper, but the actual skills that it is supposed to certify.
Table of Contents
- What the Data Shows: How Much Is a Degree Worth?
- Skills and Earnings in the Labor Market: Beyond the Diploma
- Overqualification: When a Degree Doesn’t Translate into Income
- Pay transparency changes the equation
- What Skills and Earnings Mean for Companies in the Labor Market
- Frequently Asked Questions
What the Data Shows: How Much a Degree Is Worth
On average, the correlation between education and income is real and strong. The higher the level of education, the higher the median income—and in Romania, the difference is even greater than the European average:
| Comparison of Median Net Income (2024) | Difference |
|---|---|
| Higher Education vs. Secondary Education — Romania | ≈ +51% |
| Higher Education vs. Secondary Education — EU Average | ≈ +38% |
| Higher vs. lower education — EU average | ≈ +68% |
Source: Eurostat, adjusted median net income per household (EU-SILC, 2024). The surface-level conclusion seems simple: more education, more money. But the average hides huge differences—between fields of study, between graduates’ actual skills, and between regions. A graduate with a degree but without the required skills does not benefit from that 51% premium; they are counted in the overqualification statistics. And in Romania’s already limited labor market, the gap between a degree and actual skills determines who actually benefits from this additional income.
Skills and Earnings in the Labor Market: Beyond the Diploma
The relationship between skills and earnings in the labor market is explained not by the degree itself, but by what it certifies. A degree has always served as a signal: “This person has certain skills.” When the signal is accurate, the starting salary is justified; when the degree and actual skills diverge—because the program was poor, the field is oversaturated, or the skills have become obsolete—income follows skill, not the piece of paper. The OECD (2025) emphasizes that the field of study and the skills actually acquired account for a large part of income differences, beyond the mere level of education.
The trend we’re seeing in the market is a “disaggregation” of the degree: employers are increasingly evaluating concrete skills—through demonstrations, portfolios, and testing—and placing less and less emphasis on the degree itself. In a market where the skills gap is acute, those who demonstrate marketable skills are rewarded, regardless of the path they took to acquire them. A degree remains a starting advantage; it is skills that sustain one’s income over time.
Overqualification: When a Degree Doesn’t Translate Into Income
The other side of the coin is overqualification: people with higher education working in positions that do not require that level of education—and, consequently, do not pay the expected salary. This phenomenon explains why, for many graduates, “more education” has not translated into “more money”: not because education doesn’t matter, but because their degree wasn’t paired with a sought-after skill or a field where there is demand.
For an individual, the practical takeaway is that choosing the right field and developing in-demand skills matter more than accumulating degrees. For a company, overqualification is a red flag: an employee who is overqualified for a role tends to leave as soon as they find a position that matches their skill level. In our experience, overqualification for certain roles is often the first sign that the pay scale no longer reflects the actual market.
A degree opens the door, but skill pays the rent. In a market that is increasingly putting your abilities to the test, your income is determined by your proven skills, not by the degree hanging on the wall.
Pay transparency changes the equation
A new factor is reshaping the entire discussion: pay transparency. EU Directive 2023/970 requires employers to disclose the criteria they use to set salaries and to justify any differences—which means that the concept of a “competitive salary,” without specific figures, disappears, and the link between skills, level, and income becomes visible and verifiable. The fundamental effect, beyond the implementation timeline, is that pay based on actual skills becomes harder to conceal: if two people do the same work, the difference in income must have an objective justification.
For employees, this reinforces the logic that “skill = income”: the criteria become explicit. For companies, it means that pay scales must be consistent and justifiable—not based on individual negotiation and a lack of transparency.
What Skills and Earnings Mean for Companies in the Labor Market
For a company, the relationship between skills and earnings in the labor market translates into several concrete decisions:
- You pay for competence, not a degree. Pay scales based on actual skills and performance are more effective at attracting and retaining employees than those based on formal education.
- You assess what the person is capable of doing. Evidence, case studies, and structured assessments reveal more about a candidate’s value than a diploma alone.
- You set your salaries based on the actual market. With pay transparency now a priority, a fair pay benchmark—based on role, skills, and region—becomes mandatory, not optional.
Request a labour market study / salary benchmark from Psihoselect —we’ll show you how skills and earnings are linked in the job market relevant to you: how much the market pays for the skills you need, in your role and region, so that your pay scale is accurate, competitive, and defensible in the face of salary transparency.
Frequently Asked Questions
If you have a college degree, do you earn more?
On average, yes, and the difference is significant: in Romania, people with a college degree earn about 51% more than those with a high school diploma, compared to the EU average of +38% (Eurostat, EU-SILC 2024). But the average masks significant variations depending on the field, actual skills, and region—a degree only pays off when it’s paired with a sought-after skill.
Which is more important: a degree or skills?
In the long run, it’s about skills. A degree serves as an indicator of skills; when that indicator is accurate, the income premium is justified, but when there is a disconnect between the degree and actual skills, income follows skill level. Employers are increasingly evaluating what a candidate can actually do, rather than just the degree they hold. Over time, the relationship between skills and earnings in the labor market increasingly favors proven ability.
What is overqualification, and why does it matter?
This is the situation where a person with a college degree works in a position that doesn’t require that level of education—and doesn’t receive the expected salary. It explains why, for many graduates, “more education” hasn’t translated into “more money.” For companies, this is a red flag: the overqualified employee will leave as soon as they find a role that matches their qualifications.
How does pay transparency change the relationship between education and income?
EU Directive 2023/970 requires employers to disclose their pay criteria and justify any pay differences. The underlying effect is that pay based on actual competencies becomes transparent and verifiable, while vague phrases such as “competitive salary” disappear. Companies need coherent pay scales, grounded in competencies and supported by an accurate salary benchmark.
