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Returns to education and wage equations

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  • Pedro Telhado Pereira
  • Pedro Silva Martins

Abstract

The paper shows why considering a number of education-dependent covariates in a wage equation decreases the coefficient of education in that equation. This result is illustrated empirically with a meta-analysis for Portugal. The education coefficient decreases when covariates are used that can be considered post-education decisions; on the other hand, it is independent of sample size, tenure and whether hourly or monthly wages are used. These results support the use of a simple specification of the Mincer equation for the study of the total returns to education.

Suggested Citation

  • Pedro Telhado Pereira & Pedro Silva Martins, 2004. "Returns to education and wage equations," Applied Economics, Taylor & Francis Journals, vol. 36(6), pages 525-531.
  • Handle: RePEc:taf:applec:v:36:y:2004:i:6:p:525-531
    DOI: 10.1080/0003684042000217571
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    References listed on IDEAS

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    1. Richard B. Freeman & James L. Medoff, 1979. "The Two Faces of Unionism," NBER Working Papers 0364, National Bureau of Economic Research, Inc.
    2. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863 Elsevier.
    3. Krueger, Alan B & Summers, Lawrence H, 1988. "Efficiency Wages and the Inter-industry Wage Structure," Econometrica, Econometric Society, vol. 56(2), pages 259-293, March.
    4. Oliver Hart & Bengt Holmstrom, 1986. "The Theory of Contracts," Working papers 418, Massachusetts Institute of Technology (MIT), Department of Economics.
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    More about this item

    JEL classification:

    • C4 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics
    • I2 - Health, Education, and Welfare - - Education
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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