Returns to education in transition and advanced European countries: The role of an expansion of higher education

Cross-national comparisons on returns to education were so far based on secondary evidence from national studies. Unlike in Western European countries, in Eastern countries the data on the levels and development of returns since 1990 shows a uniform upward trend in returns to higher education. Since 2004, the European Union Statistics on Income and Living Conditions (EU-SILC) provides a unique comparative database. In 2009, midway through the period observed by EU-SILC, came the breaking point when rising returns to tertiary education started to decrease, albeit slightly. In general, differences over time are not as big as differences between individual countries. Although converging, the returns to tertiary education in Eastern and Western countries remain still far apart, considerably higher in Eastern countries. Panel analysis with economic, demographical and institutional characteristics of countries shows also substantial differences in factors of returns to tertiary education in Eastern and Western Europe. The assumed negative relationship between the share of tertiary educated workers in the working age population and the returns to tertiary education was confirmed only in Western Europe. Job vacancy rate has a significant negative impact on returns to tertiary education only in Eastern Europe. It seems that in the West, the labour market reacts on labour supply, while labour demand plays more important role in the East.