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Aggregate unemployment decreases individual returns to education

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  • Ammermueller, Andreas
  • Kuckulenz, Anja
  • Zwick, Thomas

Abstract

Aggregate unemployment may affect individual returns to education through qualification-specific responses in participation and wage bargaining. This paper shows that an increase in regional unemployment by 1% decreases returns to education by 0.005 percentage points. This implies that higher skilled employees are better sheltered from labour market changes with respect to their jobs but they encounter larger wage changes than less skilled employees. We use representative individual data and panel variation in unemployment between German regions and employee groups. We demonstrate that our results are robust with respect to aggregation bias, time lags and potential endogeneity of the unemployment variable.

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Bibliographic Info

Article provided by Elsevier in its journal Economics of Education Review.

Volume (Year): 28 (2009)
Issue (Month): 2 (April)
Pages: 217-226

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Handle: RePEc:eee:ecoedu:v:28:y:2009:i:2:p:217-226

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Web page: http://www.elsevier.com/locate/econedurev

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Keywords: Rate of education returns Wage curve Economic development;

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References

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Cited by:
  1. Ammermüller, Andreas & Lucifora, Claudio & Origo, Federica & Zwick, Thomas, 2007. "Still searching for the wage curve: evidence from Germany and Italy," ZEW Discussion Papers 07-008, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  2. Tuomo Suhonen & Jaakko Pehkonen & Hannu Tervo, 2011. "Spatial variation in the development of the return to university education in Finland, 1970-2004," ERSA conference papers ersa10p1351, European Regional Science Association.

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