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Firm Entry Deregulation, Competition and Returns to Education and Skill

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  • Ana P. Fernandes

    ()
    (University of Exeter)

  • Priscila Ferreira

    ()
    (NIMA, Universidade do Minho)

  • L. Alan Winters

    ()
    (University of Sussex, CEPR, CEP and IZA)

Abstract

This paper studies the effect of firm entry deregulation on the returns to skill and education. We use matched employer-employee data for the universe of workers and firms in Portugal and exploit a comprehensive episode of entry deregulation, unique in the industrialized world, as a quasi-natural experiment to investigate how increased competition affects wages. We find that after the reform the returns to a university degree increased by around 5 percent and the returns to skills increased by around 3 percent. We include match (worker-firm) fixed effects and thus identify the effect from individuals who stay in the same firm after the reform. Results are therefore not driven by changes in employment composition, and are supportive of education and skill becoming more valuable after the reform.

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Bibliographic Info

Paper provided by Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho in its series NIMA Working Papers with number 48.

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Length: 34 pages
Date of creation: Apr 2013
Date of revision:
Handle: RePEc:nim:nimawp:48/2013

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Related research

Keywords: Entry; Deregulation; Product Market Competition; Wage Structure; Returns to Education;

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References

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Cited by:
  1. Ana P. Fernandes & Priscila Ferreira & L. Alan Winters, 2014. "The Effect of Competition on Managers' Compensation: Evidence From a Quasi-natural Experiment," NIMA Working Papers, Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho 57, Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho.

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