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Educational Qualifications and Wage Inequality: Evidence for Europe

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Budria, Santiago
Telhado-Pereira, Pedro

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Abstract

This paper explores the connection between education and wage inequality in nine European countries. We exploit the quantile regression technique to calculate returns to lower secondary, upper secondary and tertiary education at different points of the wage distribution. We find that in most countries returns to tertiary education are highly increasing when moving from the lower to the upper quantiles. This finding suggests that an educational expansion towards tertiary education is expected to increase overall within-groups inequality in Europe. In turn, returns to secondary education are quite homogeneous across quantiles, suggesting that an educational expansion towards secondary education is expected to have only a limited impact on within-groups dispersion. Using data from the last decades, we describe changes in the conditional wage distribution of the surveyed countries. A common feature in Europe is that over the last years wage dispersion increased within the high educated.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 91.

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Date of creation: 2005
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Handle: RePEc:pra:mprapa:91

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Related research
Keywords: Returns to education Quantile regression Wage inequality

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Find related papers by JEL classification:
C29 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Other
D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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References listed on IDEAS
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.:
  1. O. Ben Abdelkarim & A. Skalli, 2003. "Educational and Economic inequality in France. A survey of the Litterature," Working Papers ERMES 0316, ERMES, University Paris 2. [Downloadable!]
  2. Barro, Robert J, 2000. " Inequality and Growth in a Panel of Countries," Journal of Economic Growth, Springer, vol. 5(1), pages 5-32, March. [Downloadable!] (restricted)
  3. Pereira, Pedro Telhado & Martins, Pedro Silva, 2000. "Does Education Reduce Wage Inequality? Quantile Regressions Evidence from Fifteen European Countries," IZA Discussion Papers 120, Institute for the Study of Labor (IZA). [Downloadable!]
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  4. Hartog, Joop, 2000. "Over-education and earnings: where are we, where should we go?," Economics of Education Review, Elsevier, vol. 19(2), pages 131-147, April. [Downloadable!] (restricted)
  5. Tom Clark & Jayne Taylor, 1999. "Income inequality: a tale of two cycles?," Fiscal Studies, Institute for Fiscal Studies, vol. 20(4), pages 387-408, December. [Downloadable!]
  6. Machin, Stephen, 1997. "The decline of labour market institutions and the rise in wage inequality in Britain," European Economic Review, Elsevier, vol. 41(3-5), pages 647-657, April. [Downloadable!] (restricted)
  7. José Mata & José A. F. Machado, 2005. "Counterfactual decomposition of changes in wage distributions using quantile regression," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(4), pages 445-465. [Downloadable!]
  8. Peter Dolton, 2001. "Over education in the graduate labour market: Some evidence from alumni data," CEE Discussion Papers 0009, Centre for the Economics of Education, LSE. [Downloadable!]
  9. Fersterer, Josef & Winter-Ebmer, Rudolf, 2003. "Are Austrian returns to education falling over time?," Labour Economics, Elsevier, vol. 10(1), pages 73-89, February. [Downloadable!] (restricted)
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  10. A Gosling & S Machin & C Meghir, 1995. "The Changing Distribution of Male Wages in the UK," CEP Discussion Papers 0271, Centre for Economic Performance, LSE.
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  11. Mark Sanders & Bas ter Weel, 2000. "Skill-Biased Technical Change: Theoretical Concepts, Empirical Problems and a Survey of the Evidence," DRUID Working Papers 00-8, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies. [Downloadable!]
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  12. Hartog, Joop & Pereira, Pedro T & Vieira, Jose A C, 2001. "Changing Returns to Education in Portugal during the 1980s and Early 1990s: OLS and Quantile Regression Estimators," Applied Economics, Taylor and Francis Journals, vol. 33(8), pages 1021-37, June. [Downloadable!] (restricted)
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  13. Harmon, Colm & Hogan, Vincent & Walker, Ian, 2003. "Dispersion in the economic return to schooling," Labour Economics, Elsevier, vol. 10(2), pages 205-214, April. [Downloadable!] (restricted)
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  14. Pereira, Pedro Telhado & Martins, Pedro Silva, 2001. "Is there a Return-Risk Link in Education?," IZA Discussion Papers 321, Institute for the Study of Labor (IZA). [Downloadable!]
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  15. José A. F. Machado & José Mata, 2001. "Earning functions in Portugal 1982-1994: Evidence from quantile regressions," Empirical Economics, Springer, vol. 26(1), pages 115-134. [Downloadable!] (restricted)
  16. Giorgio Brunello, 2007. "The Effects of Cohort Size on European Earnings," "Marco Fanno" Working Papers 0036, Dipartimento di Scienze Economiche "Marco Fanno". [Downloadable!]
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Cited by:
(explanations, 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.)

  1. Gernandt, Johannes & Pfeiffer, Friedhelm, 2006. "Rising Wage Inequality in Germany," ZEW Discussion Papers 06-19, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
    Other versions:
  2. Budria, Santiago, 2006. "Schooling and the distribution of wages in the european private and public sectors," MPRA Paper 90, University Library of Munich, Germany. [Downloadable!]
  3. Corrado Andini, 2007. "A Dynamic Mincer Equation with an Application to Portuguese Data," IZA Discussion Papers 2897, Institute for the Study of Labor (IZA). [Downloadable!]
  4. Patrinos, Harry Anthony & Ridao-Cano, Cris & Sakellariou, Chris, 2006. "Estimating the returns to education : accounting for heterogeneity in ability," Policy Research Working Paper Series 4040, The World Bank. [Downloadable!]
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