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Comparative analysis of the returns to education in Germany and Hungary (2000)

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  • Szilvia Hamori

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    (Center for Doctoral Studies in Economics & Management of the Univeristy of Mannheim)

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    Abstract

    In this study standard Mincer earnings equations are estimated using both ordinary least squares (OLS) and quantile regression in order to give a comprehensive picture of the returns to education in Germany and Hungary for the year 2000. To make the cross-country comparison of the returns to education informative, six differentiated categories for formal education, rather than years of schooling, are generated and used in the empirical analysis. Moreover, the returns to three and eight field of study groups for Germany and Hungary respectively are estimated in order to shed more light on the valuation of specific university degree. Most importantly, the empirical results provide evidence for the fact that the OLS estimate is not an accurate estimate of the return to education for the population (more specifically for the selected samples). That is, the estimates of the quantile regressions point to the fact that differences in returns to education within educational groups contribute significantly to aggregate earnings inequality, especially in Hungary.

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    File URL: http://www.econ.core.hu/doc/bwp/bwp/bwp0507.pdf
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    Bibliographic Info

    Paper provided by Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences in its series Budapest Working Papers on the Labour Market with number 0507.

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    Length: 54 pages
    Date of creation: Nov 2005
    Date of revision:
    Handle: RePEc:has:bworkp:0507

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    Related research

    Keywords: Quantile regression; education systems; return to education; between-educational-levels earnings inequality; within-educational-levels earnings inequality;

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    1. Alan Krueger & Jorn-Steffen Pischke, 1992. "A Comparative Analysis of East and West German Labor Markets: Before and After Unification," Working Papers 686, Princeton University, Department of Economics, Industrial Relations Section..
    2. Reinhard Hujer & Bernd Fitzenberger & Reinhold Schnabel & Thomas E. MaCurdy, 2001. "Testing for uniform wage trends in West-Germany: A cohort analysis using quantile regressions for censored data," Empirical Economics, Springer, vol. 26(1), pages 41-86.
    3. Koenker,Roger, 2005. "Quantile Regression," Cambridge Books, Cambridge University Press, number 9780521845731, October.
    4. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
    5. Arpad Abraham & Gabor Kezdi, 2000. "Long-run trends in earnings and employment in Hungary, 1972-1996," Budapest Working Papers on the Labour Market 0002, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
    6. Moshe Buchinsky, 1998. "Recent Advances in Quantile Regression Models: A Practical Guideline for Empirical Research," Journal of Human Resources, University of Wisconsin Press, vol. 33(1), pages 88-126.
    7. Peter Galasi, 2003. "Estimating wage equations for Hungarian higher-education graduates," Budapest Working Papers on the Labour Market 0304, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
    8. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863 Elsevier.
    9. Orazem, Peter F. & Vodopivec, Milan, 1997. "Value of human capital in transition to market: Evidence from Slovenia," European Economic Review, Elsevier, vol. 41(3-5), pages 893-903, April.
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