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Rising Wage Inequality and Postgraduate Education

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  • Lindley, Joanne

    () (University of Surrey)

  • Machin, Stephen

    () (University College London)

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 Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5981.

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Length: 58 pages
Date of creation: Sep 2011
Date of revision:
Handle: RePEc:iza:izadps:dp5981

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Keywords: wage inequality; postgraduate education; computers;

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References

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  1. Ian Walker & Yu Zhu, 2008. "The College Wage Premium and the Expansion of Higher Education in the UK," Studies in Economics 0809, Department of Economics, University of Kent.
  2. Manacorda, Marco & Manning, Alan & Wadsworth, Jonathan, 2006. "The Impact of Immigration on the Structure of Male Wages: Theory and Evidence from Britain," IZA Discussion Papers 2352, Institute for the Study of Labor (IZA).
  3. Michaels, Guy & Natraj, Ashwini & Van Reenen, John, 2010. "Has ICT Polarized Skill Demand? Evidence from Eleven Countries over 25 years," CEPR Discussion Papers 7898, C.E.P.R. Discussion Papers.
  4. 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, vol. 24(2), pages 235-270, April.
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  6. Thomas Lemieux, 2006. "Postsecondary Education and Increasing Wage Inequality," American Economic Review, American Economic Association, vol. 96(2), pages 195-199, May.
  7. 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, vol. 5(4), pages 663-708, 06.
  8. Tinbergen, Jan, 1974. "Substitution of Graduate by Other Labour," Kyklos, Wiley Blackwell, vol. 27(2), pages 217-26.
  9. Christian Dustmann & Johannes Ludsteck & Uta Schönberg, 2009. "Revisiting the German Wage Structure," The Quarterly Journal of Economics, MIT Press, vol. 124(2), pages 843-881, May.
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  12. Maarten Goos & Alan Manning, 2007. "Lousy and Lovely Jobs: The Rising Polarization of Work in Britain," The Review of Economics and Statistics, MIT Press, vol. 89(1), pages 118-133, February.
  13. Pedro Carneiro & Sokbae Lee, 2011. "Trends in Quality-Adjusted Skill Premia in the United States, 1960-2000," American Economic Review, American Economic Association, vol. 101(6), pages 2309-49, October.
  14. Paul J Devereux & Wen Fan, 2011. "Earnings Returns to the British Education Expansion," Working Papers 201111, School Of Economics, University College Dublin.
  15. Goos, Maarten & Manning, Alan & Salomons, Anna, 2009. "The polarization of the European labor market," Open Access publications from Katholieke Universiteit Leuven urn:hdl:123456789/208037, Katholieke Universiteit Leuven.
  16. Eli Berman & John Bound & Zvi Griliches, 1994. "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.
  17. 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, vol. 118(5), pages 988 - 1036.
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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. Gasparini, Leonardo & Galiani, Sebastián & 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).
  2. 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.
  3. MORIKAWA Masayuki, 2012. "Postgraduate Education and Human Capital Productivity in Japan," Discussion papers 12009, Research Institute of Economy, Trade and Industry (RIETI).
  4. 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).
  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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