Returns To College Over Time: Trends In Europe In The Last 15 Years. Stuck On The Puzzle
AbstractWhile there has been intense debate in the empirical literature about the evolution of the college wage premium in the US, its evolution in Europe has been given little attention. This paper aims to investigate the evolution of the returns to higher education in 12 European countries from 1994 to 2009. In particular, it explores how does this evolution affect wage inequality and how it differs across age cohorts. The period of interest has seen higher education participation rate increasing dramatically: graduate supply considerably outstripped demand which ought to imply a fall in the premium. I use cross country variation in relative supply, demand and labour market institutions to look at their effects on the trend in the college wage gap. I address possible concerns of endogeneity of relative supply by an instrumental variable strategy. Results show a significant decline of college returns in countries with higher relative supply of skilled workers and a marked fall in college returns for recent cohorts for both men and women in all European countries. find evidence that both market and non market factors matter in explaining wage inequality. More specifically, the estimated growth in the wage gap appears negatively correlated to changes in relative supply and positively correlated with the relative demand index, in particular, in countries with higher relative supply of skilled workers, that present a stronger decline in the returns to college. Institutional constraints also matter.
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 Dipartimento di Scienze Economiche "Marco Fanno" in its series "Marco Fanno" Working Papers with number 0146.
Length: 56 pages
Date of creation: Jul 2012
Date of revision:
Find related papers by JEL classification:
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- I24 - Health, Education, and Welfare - - Education - - - Education and Inequality
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-09-09 (All new papers)
- NEP-EUR-2012-09-09 (Microeconomic European Issues)
- NEP-LAB-2012-09-09 (Labour Economics)
- NEP-LMA-2012-09-09 (Labor Markets - Supply, Demand, & Wages)
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.:
- Colm Harmon & Hessel Oosterbeek & Ian Walker, 2003. "The Returns to Education: Microeconomics," Journal of Economic Surveys, Wiley Blackwell, Wiley Blackwell, vol. 17(2), pages 115-156, 04.
- Arnaud Chevalier & Joanne Lindley, 2009.
"Overeducation and the skills of UK graduates,"
Journal of the Royal Statistical Society Series A,
Royal Statistical Society, vol. 172(2), pages 307-337.
- Arnaud Chevalier & Joanne Lindley, 2007. "Over-Education and the Skills of UK Graduates," CEE Discussion Papers, Centre for the Economics of Education, LSE 0079, Centre for the Economics of Education, LSE.
- Arnaud Chevalier & Joanne Lindley, 2007. "Over-education and the skills of UK graduates," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 19397, London School of Economics and Political Science, LSE Library.
- Chevalier, Arnaud & Lindley, Joanne, 2006. "Over-Education and the Skills of UK Graduates," IZA Discussion Papers 2442, Institute for the Study of Labor (IZA).
- Blaise Melly, 2005. "Public-private sector wage differentials in Germany: Evidence from quantile regression," Empirical Economics, Springer, Springer, vol. 30(2), pages 505-520, 09.
- Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters, in: Schooling, Experience, and Earnings, pages 1-4 National Bureau of Economic Research, Inc.
- Koeniger, Winfried & Leonardi, Marco & Nunziata, Luca, 2004.
"Labour Market Institutions and Wage Inequality,"
IZA Discussion Papers
1291, Institute for the Study of Labor (IZA).
- Martins, Pedro S. & Pereira, Pedro T., 2004. "Does education reduce wage inequality? Quantile regression evidence from 16 countries," Labour Economics, Elsevier, Elsevier, vol. 11(3), pages 355-371, June.
- Deschenes, Olivier, 2001. "Unobserved Ability, Comparative Advantage, and the Rising Return to Education in the United States 1979-2000," University of California at Santa Barbara, Economics Working Paper Series qt10v9j8jz, Department of Economics, UC Santa Barbara.
- Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1, July.
- Richard Dickens & Stephen Machin & Alan Manning, 1994.
"The Effects of Minimum Wages on Employment: Theory and Evidence from Britain,"
CEP Discussion Papers, Centre for Economic Performance, LSE
dp0183, Centre for Economic Performance, LSE.
- Dickens, Richard & Machin, Stephen & Manning, Alan, 1999. "The Effects of Minimum Wages on Employment: Theory and Evidence from Britain," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 17(1), pages 1-22, January.
- Christian Pfeifer, 2011.
"Risk Aversion and Sorting into Public Sector Employment,"
German Economic Review, Verein für Socialpolitik,
Verein für Socialpolitik, vol. 12(1), pages 85-99, 02.
- Pfeifer, Christian, 2008. "Risk Aversion and Sorting into Public Sector Employment," IZA Discussion Papers 3503, Institute for the Study of Labor (IZA).
- Milligan, Kevin & Moretti, Enrico & Oreopoulos, Philip, 2004. "Does education improve citizenship? Evidence from the United States and the United Kingdom," Journal of Public Economics, Elsevier, Elsevier, vol. 88(9-10), pages 1667-1695, August.
- Braga, Michela & Checchi, Daniele & Meschi, Elena, 2011. "Institutional Reforms and Educational Attainment in Europe: A Long Run Perspective," IZA Discussion Papers 6190, Institute for the Study of Labor (IZA).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Fabio Maria Manenti).
If references are entirely missing, you can add them using this form.