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Returns to Education and Wage Equations

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  • Pereira, Pedro T.

    ()
    (University of Madeira)

  • Martins, Pedro S.

    ()
    (Queen Mary, University of London)

Abstract

We show why considering a number of education-dependent covariates in the wage equation decreases coefficient of education in the wage equation. We use a meta-analysis of results for Portugal to show, empirically, that this is the case. The coefficient decreases when we use covariates that can be considered post education decisions; it is independent of the sample size, tenure and the fact of using hourly or monthly wages. At this stage the use of the simple specification of the Mincer equation for the study of total returns to education continues to hold our support.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 298.

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Length: 38 pages
Date of creation: Jun 2001
Date of revision:
Publication status: published in: Applied Economics, 2004, 36 (6), 525-531
Handle: RePEc:iza:izadps:dp298

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Keywords: educational economics; rate of return; Human capital;

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  1. 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.
  2. Krueger, Alan B & Summers, Lawrence H, 1988. "Efficiency Wages and the Inter-industry Wage Structure," Econometrica, Econometric Society, vol. 56(2), pages 259-93, March.
  3. Richard B. Freeman & James L. Medoff, 1979. "The Two Faces of Unionism," NBER Working Papers 0364, National Bureau of Economic Research, Inc.
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