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The Impact of Education on Wage Determination between Workers in Southern and Central-Northern Italy

Author

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  • Massimiliano Agovino Author-Email: agovino.massimo@gmail.com

    (Department of Economic and Legal Studies, University of Naples ''Parthenope'', Napoli, Italy)

  • Antonio Garofalo Author-Email: antonio.garofalo@uniparthenope.it

    (Department of Economic and Legal Studies, University of Naples ''Parthenope'', Napoli, Italy)

Abstract

The aim of this paper is to examine the earnings dynamic in Italy, in order to explain earnings differences between southern Italy and central- northern Italy. In our analysis we use different techniques: ordinary least squares (OLS), quantile regression models and the algorithm developed by Machado and Mata (2005). In particular, the Machado and Mata (2005) algo- rithm allows us to examine the relative importance of both differences in work- ers’ characteristics and in their returns in explaining southern, central and northern Italy earnings differences at a point in time, as well as across time within each macro-area. We focus on the role of differences in educational endowment and returns to education, one of the most important components of human capital in the stylised literature. The level of education determines the substantial disparities in terms of wage returns. However, this holds only for levels of education related to compulsory education.

Suggested Citation

  • Massimiliano Agovino Author-Email: agovino.massimo@gmail.com & Antonio Garofalo Author-Email: antonio.garofalo@uniparthenope.it, 2016. "The Impact of Education on Wage Determination between Workers in Southern and Central-Northern Italy," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 63(1), pages 25-43, March.
  • Handle: RePEc:voj:journl:v:63:y:2016:i:1:p:25-43
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    References listed on IDEAS

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    More about this item

    Keywords

    Quantile regression; Wage gap decomposition; Returns to educa- tion; Italy; Human capital;
    All these keywords.

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • 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
    • J45 - Labor and Demographic Economics - - Particular Labor Markets - - - Public Sector Labor Markets
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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