That regression (which is called a mincerian wage equation & economists have been running it for about 40 years) will give you the average percentage increase in earnings (if you do it in logs) from another year of education. That average measure can be consistent with lots of different dynamics---which is Mankiw's point. Perhaps another year of education increases earnings by 10% across the board (deterministic view) or perhaps is increase by 10% the chance that your income will increase 100% but 90% of the time does nothing.

Note: All of this is just correlational---there are serious problems w/ treating these regressions as establishing causality, but that's another issue.