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The schooling response to a sustained increase in low-skill wages: evidence from Spain 1989-2009

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Author Info

  • Aitor Lacuesta

    ()
    (Banco de España)

  • Sergio Puente

    ()
    (Banco de España)

  • Ernesto Villanueva

    ()
    (Banco de España)

Abstract

The response of human capital accumulation to changes in the anticipated returns to schooling determines the type of skills supplied to the labor market, the productivity of future cohorts, and the evolution of inequality. Unlike the US, the UK or Germany, Spain has experienced since 1995 a drop in the returns to medium and tertiary education and, with a lag, a drop in schooling attainment of recent cohorts, providing the opportunity to estimate the response of different forms of human capital acquisition to relative increases in low-skill wages. We measure the expected returns to schooling using skill-specific wages bargained in collective agreements at the province-industry level. We argue that those wages are easily observable by youths and relatively insensitive to shifts in the supply of workers. Our preferred estimates suggest that a 10% increase in the ratio of wages of unskilled workers to the wages of mid-skill workers increases the fraction of males completing at most compulsory schooling by between 2 and 5 percentage points. The response is driven by males from less educated parents and comes at the expense of students from the academic high school track rather than the vocational training track.

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File URL: http://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosTrabajo/12/Fich/dt1208e.pdf
File Function: First version, Febrary 2012
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Bibliographic Info

Paper provided by Banco de Espa�a in its series Banco de Espa�a Working Papers with number 1208.

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Length: 51 pages
Date of creation: Feb 2011
Date of revision:
Handle: RePEc:bde:wpaper:1208

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Keywords: Collective bargaining; human capital;

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References

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  1. Beffy, Magali & Fougère, Denis & Maurel, Arnaud, 2009. "Choosing the Field of Study in Post-Secondary Education: Do Expected Earnings Matter?," IZA Discussion Papers 4127, Institute for the Study of Labor (IZA).
  2. Pijoan-Mas, Josep & Sánchez-Marcos, Virginia, 2009. "Spain is Different: Falling Trends of Inequality," CEPR Discussion Papers 7489, C.E.P.R. Discussion Papers.
  3. Joseph G. Altonji & Prashant Bharadwaj & Fabian Lange, 2008. "Changes in the Characteristics of American Youth: Implications for Adult Outcomes," NBER Working Papers 13883, National Bureau of Economic Research, Inc.
  4. Pedro Carneiro & Sokbae 'Simon' Lee, 2009. "Trends in quality-adjusted skill premia in the United States, 1960-2000," CeMMAP working papers CWP02/09, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  5. Dan A. Black & Terra G. McKinnish & Seth G. Sanders, 2005. "Tight labor markets and the demand for education: Evidence from the coal boom and bust," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 59(1), pages 3-16, October.
  6. Aparicio Fenoll, Ainhoa, 2010. "High-School Dropouts and Transitory Labor Market Shocks: The Case of the Spanish Housing Boom," IZA Discussion Papers 5139, Institute for the Study of Labor (IZA).
  7. Florentino Felgueroso & Manuel Hidalgo & SergiJiménez Martín, 2010. "Explaining the fall of the skill wage premium in Spain," Working Papers 2010-19, FEDEA.
  8. Harris Dellas & Plutarchos Sakellaris, 2003. "On the cyclicality of schooling: theory and evidence," Oxford Economic Papers, Oxford University Press, vol. 55(1), pages 148-172, January.
  9. Charles T. Clotfelter & Michael Rothschild, 1993. "Studies of Supply and Demand in Higher Education," NBER Books, National Bureau of Economic Research, Inc, number clot93-1, May.
  10. Eric D. Gould & Bruce A. Weinberg & David B. Mustard, 2002. "Crime Rates And Local Labor Market Opportunities In The United States: 1979-1997," The Review of Economics and Statistics, MIT Press, vol. 84(1), pages 45-61, February.
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Cited by:
  1. Florentino Felgueroso & María Gutiérrez-Domènech & Sergi Jiménez-Martín, 2013. "Dropout Trends and Educational Reforms: The Role of the LOGSE in Spain," Working Papers 2013-04, FEDEA.
  2. Stéphane Bonhomme & Laura Hospido, 2012. "The Cycle Of Earnings Inequality: Evidence From Spanish Social Security Data," Working Papers wp2012_1209, CEMFI.
  3. J. Ignacio García Pérez & Victoria Osuna, 2012. "Dual Labour Markets and the Tenure Distribution: Reducing Severance Pay or Introducing a Single Contract?," Working Papers 2012-09, FEDEA.
  4. Miguel García-Posada & Juan S. Mora-Sanguinetti, 2013. "Firm size and judicial efficacy: Evidence for the civil procedures in Spain," Banco de Espa�a Working Papers 1303, Banco de Espa�a.

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