Returns to Education and Macroeconomic Shocks: Evidence from Argentina
AbstractReturns to schooling in urban Argentina increased from 1992 to 2003, a period of economic reforms and macroeconomic volatility. In this paper I provide the most consistent estimates of returns to education so far, while I also investigate earnings profiles over time. This paper contributes to the existing literature by employing a variety of methodologies in order to estimate these returns and by using macroeconomic time series to explore shifts in earnings. The pattern of the increasing returns to education changes after the 2001 crisis. Until then, increasing convexity in the earnings-education profile reflects increasing or stable earnings for college graduates combined with decreasing earnings for the less educated. After the crisis, the increasing premium to education results from wages falling at a faster pace for the less educated than for college graduates. This result is robust to endogenous supply responses, selection, specification, changes in the functional form and to the inclusion of household fixed effects. I also find that rates of return to education are upward biased by up to 20 per cent by the omission of unobserved family background factors (i.e. family fixed effects). Surprisingly, after controlling for macroeconomic variables I still find a statistically and economically significant downward trend for all earnings, particularly those of primary completers.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 4753.
Length: 45 pages
Date of creation: Feb 2010
Date of revision:
Contact details of provider:
Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org
Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Find related papers by JEL classification:
- I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-02-27 (All new papers)
- NEP-DEV-2010-02-27 (Development)
- NEP-EDU-2010-02-27 (Education)
- NEP-LAB-2010-02-27 (Labour Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Carola Pessino, 1993. "From Aggregate Shocks to Labor Market Adjustments: Shifting of Wage Profiles Under Hyperinflation in Argentina," CEMA Working Papers: Serie Documentos de Trabajo. 95, Universidad del CEMA.
- Berman, E. & Bound, J. & Machin, S., 1997.
"Implications of Skill-Biased Technological Change: International Evidence,"
25, Centre for Economic Performance & Institute of Economics.
- Eli Berman & John Bound & Stephen Machin, 1998. "Implications Of Skill-Biased Technological Change: International Evidence," The Quarterly Journal of Economics, MIT Press, vol. 113(4), pages 1245-1279, November.
- E Berman & J Bound & Stephen Machin, 1997. "Implications of Skill-Biased Technological Change: International Evidence," CEP Discussion Papers dp0367, Centre for Economic Performance, LSE.
- Eli Berman & John Bound & Stephen Machin, 1997. "Implications of Skill-Biased Technological Change: International Evidence," NBER Working Papers 6166, National Bureau of Economic Research, Inc.
- Eli Berman & John Bound & Stephen Machin, 1997. "Implications of Skill-Biased Technological Change: International Evidence," Boston University - Institute for Economic Development 78, Boston University, Institute for Economic Development.
- Berman, Eli & Bound, John & Machin, Stephen, 1997. "Implications of Skill-Biased Technological Change: International Evidence," Working Paper Series 486, Research Institute of Industrial Economics.
- McKenzie, David J, 2004. "Aggregate Shocks and Urban Labor Market Responses: Evidence from Argentina's Financial Crisis," Economic Development and Cultural Change, University of Chicago Press, vol. 52(4), pages 719-58, July.
- Gould, Eric D & Moav, Omer & Weinberg, Bruce A, 2001. " Precautionary Demand for Education, Inequality, and Technological Progress," Journal of Economic Growth, Springer, vol. 6(4), pages 285-315, December.
- Butcher, Kristin F & Case, Anne, 1994. "The Effect of Sibling Sex Composition on Women's Education and Earnings," The Quarterly Journal of Economics, MIT Press, vol. 109(3), pages 531-63, August.
- Marcel Fafchamps & MÃƒÂ¥ns SÃƒÂ¶derbom & Najy Benhassine, 2006.
"Job Sorting in African Labor Markets,"
Economics Series Working Papers
WPS/2006-02, University of Oxford, Department of Economics.
- Lazear, Edward P & Moore, Robert L, 1984. "Incentives, Productivity, and Labor Contracts," The Quarterly Journal of Economics, MIT Press, vol. 99(2), pages 275-96, May.
- Giovagnoli, Paula Ines & Fiszbein, Ariel & Patrinos, Harry Anthony, 2005. "Estimating the returns to education in Argentina : 1992-2002," Policy Research Working Paper Series 3715, The World Bank.
- Pabo Sanguinetti & Sebastian Galiani, 2003.
"The impact of trade liberalizationon wage inequality:Evidence from Argentina,"
Department of Economics Working Papers
011, Universidad Torcuato Di Tella.
- Galiani, Sebastian & Sanguinetti, Pablo, 2003. "The impact of trade liberalization on wage inequality: evidence from Argentina," Journal of Development Economics, Elsevier, vol. 72(2), pages 497-513, December.
- Sebastian Galiani & Pablo Sanguinetti, 2003. "The Impact of Trade Liberalization on Wage Inequality: Evidence from Argentina," Working Papers 65, Universidad de San Andres, Departamento de Economia, revised Oct 2003.
- Savanti, Maria Paula & Patrinos, Harry Anthony, 2005. "Rising returns to schooling in Argentina, 1992-2002 : productivity or credentialism?," Policy Research Working Paper Series 3714, The World Bank.
- Kugler, Bernardo & Psacharopoulos, George, 1989. "Earnings and education in Argentina: an analysis of the 1985 Buenos Aires Household Survey," Economics of Education Review, Elsevier, vol. 8(4), pages 353-365, August.
- Richard B. Freeman, 1979.
"The Effect of Demographic Factors on Age-Earnings Profiles,"
NBER Working Papers
0316, National Bureau of Economic Research, Inc.
- Richard B. Freeman, 1979. "The Effect of Demographic Factors on Age-Earnings Profiles," Journal of Human Resources, University of Wisconsin Press, vol. 14(3), pages 289-318.
- Patrinos, Harry Anthony & Sakellariou, Chris, 2004.
"Economic volatility and returns to education in Venezuela : 1992-2002,"
Policy Research Working Paper Series
3459, The World Bank.
- Harry Anthony Patrinos & Chris Sakellariou, 2006. "Economic volatility and returns to education in Venezuela: 1992-2002," Applied Economics, Taylor & Francis Journals, vol. 38(17), pages 1991-2005.
- Schultz, Theodore W, 1975. "The Value of the Ability to Deal with Disequilibria," Journal of Economic Literature, American Economic Association, vol. 13(3), pages 827-46, September.
- Marco Manacorda & Carolina Sánchez-Páramo & Norbert Schady, 2010.
"Changes in Returns to Education in Latin America: The Role of Demand and Supply of Skills,"
Industrial and Labor Relations Review,
ILR Review, Cornell University, ILR School, vol. 63(2), pages 307-326, January.
- Marco Manacorda & Carolina Sanchez-Paramo & Norbert Schady, 2005. "Changes in Returns to Education in Latin America: the Role of Demand and Supply of Skills," CEP Discussion Papers dp0712, Centre for Economic Performance, LSE.
- Pablo Acosta & Leonardo Gasparini, 2007.
"Capital Accumulation, Trade Liberalization, and Rising Wage Inequality: The Case of Argentina,"
Economic Development and Cultural Change,
University of Chicago Press, vol. 55, pages 793-812.
- Leonardo Gasparini & Pablo Acosta, 2004. "Capital Accumulation, Trade Liberalization and Rising Wage Inequality: The Case of Argentina," CEDLAS, Working Papers 0005, CEDLAS, Universidad Nacional de La Plata.
- John Schmitt, 1993. "The Changing Structure of Male Earnings in Britain," CEP Discussion Papers dp0122, Centre for Economic Performance, LSE.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak).
If references are entirely missing, you can add them using this form.