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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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References

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  15. 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.
  16. 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).
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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. MORIKAWA Masayuki, 2012. "Postgraduate Education and Human Capital Productivity in Japan," Discussion papers 12009, Research Institute of Economy, Trade and Industry (RIETI).
  2. Gasparini, Leonardo & Galiani, Sebastian & Cruces, Guillermo & Acosta, Pablo, 2011. "Educational upgrading and returns to skills in Latin America : evidence from a supply-demand framework, 1990-2010," Policy Research Working Paper Series 5921, The World Bank.
  3. Fitzenberger, Bernd & Leuschner, Ute, 2012. "Up or Out: Research Incentives and Career Prospects of Postdocs in Germany," IZA Discussion Papers 6407, Institute for the Study of Labor (IZA).
  4. 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.
  5. 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.

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