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Rising Wage Inequality and Postgraduate Education

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  • Joanne Lindley
  • Stephen Machin

Abstract

This paper considers what has hitherto been a relatively neglected subject in the wage inequality literature, albeit one that has been becoming more important over time, namely the role played by increases in postgraduate education. We document increases in the number of workers with a postgraduate qualification in the United States and Great Britain. We also show their relative wages have risen over time as compared to all workers and more specifically to graduates with only a college degree. Consideration of shifts in demand and supply shows postgraduates and college only workers to be imperfect substitutes in production and that there have been trend increases over time in the relative demand for postgraduate vis-à-vis college only workers. These relative demand shifts are significantly correlated with technical change as measured by changes in industry computer usage and investment. Moreover, the skills sets possessed by postgraduates and the occupations in which they are employed are significantly different to those of college only graduates. Over the longer term period when computers have massively diffused into workplaces, it turns out that the principal beneficiaries of this computer revolution has not been all graduates, but those more skilled workers who have a postgraduate qualification. This has been an important driver of rising wage inequality amongst graduates over time.

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Bibliographic Info

Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp1075.

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Date of creation: Sep 2011
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Handle: RePEc:cep:cepdps:dp1075

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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

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Keywords: Wage inequality; postgraduate education; computers;

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  1. Maarten Goos & Alan Manning, 2003. "Lousy and Lovely Jobs: the Rising Polarization of Work in Britain," CEP Discussion Papers dp0604, Centre for Economic Performance, LSE.
  2. Paul Beaudry & Mark Doms & Ethan Lewis, 2010. "Should the Personal Computer Be Considered a Technological Revolution? Evidence from U.S. Metropolitan Areas," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 118(5), pages 988 - 1036.
  3. Abdurrahman Aydemir & George J. Borjas, 2007. "Cross-Country Variation in the Impact of International Migration: Canada, Mexico, and the United States," Journal of the European Economic Association, MIT Press, MIT Press, vol. 5(4), pages 663-708, 06.
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  7. Machin, S. & Van Reenen, J., 1997. "Technology and Changes in Skill Structure: Evidence from Seven OECD Countries," Papers, Centre for Economic Performance & Institute of Economics 24, Centre for Economic Performance & Institute of Economics.
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  10. Alexandra Spitz-Oener, 2006. "Technical Change, Job Tasks, and Rising Educational Demands: Looking outside the Wage Structure," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 24(2), pages 235-270, April.
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  13. David Card & Thomas Lemieux, 2001. "Can Falling Supply Explain The Rising Return To College For Younger Men? A Cohort-Based Analysis," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 116(2), pages 705-746, May.
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  15. Eli Berman & John Bound & Zvi Griliches, 1993. "Changes in the Demand for Skilled Labor within U.S. Manufacturing Industries: Evidence from the Annual Survey of Manufacturing," NBER Working Papers 4255, National Bureau of Economic Research, Inc.
  16. Ian Walker & Yu Zhu, 2008. "The College Wage Premium and the Expansion of Higher Education in the UK," Scandinavian Journal of Economics, Wiley Blackwell, vol. 110(4), pages 695-709, December.
  17. Carneiro, Pedro & Lee, Sokbae, 2010. "Trends in Quality-Adjusted Skill Premia in the United States, 1960-2000," IZA Discussion Papers 5295, Institute for the Study of Labor (IZA).
  18. Tinbergen, Jan, 1974. "Substitution of Graduate by Other Labour," Kyklos, Wiley Blackwell, vol. 27(2), pages 217-26.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Rising Wage Inequality and Postgraduate Education
    by maximorossi in NEP-LTV blog on 2011-10-17 12:57:45
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Cited by:
  1. Peng, Fei & Kang, Lili, 2012. "Labour market institutions and skill premiums: an empirical analysis on the UK 1972-2002," MPRA Paper 38541, University Library of Munich, Germany.
  2. MORIKAWA Masayuki, 2013. "Postgraduate Education, Labor Participation, and Wages: An empirical analysis using micro data from Japan," Discussion papers 13065, Research Institute of Economy, Trade and Industry (RIETI).
  3. Fitzenberger, Bernd & Leuschner, Ute, 2012. "Up or out: Research incentives and career prospects of postdocs in Germany," ZEW Discussion Papers 12-020, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  4. Gasparini, Leonardo & Galiani, Sebastian & Cruces, Guillermo & Acosta, Pablo A., 2011. "Educational Upgrading and Returns to Skills in Latin America: Evidence from a Supply-Demand Framework, 1990-2010," IZA Discussion Papers 6244, Institute for the Study of Labor (IZA).
  5. MORIKAWA Masayuki, 2012. "Postgraduate Education and Human Capital Productivity in Japan," Discussion papers 12009, Research Institute of Economy, Trade and Industry (RIETI).
  6. DEIDDA, Luca G. & PAOLINI , Dimitri & ,, 2013. "Wage premia, education race, and supply of educated workers," CORE Discussion Papers, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) 2013062, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).

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