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Does Education Reduce Wage Inequality? Quantile Regressions Evidence from Fifteen European Countries

  • Pereira, Pedro T.

    ()

    (University of Madeira)

  • Martins, Pedro S.

    ()

    (Queen Mary, University of London)

We address the impact of education upon wage inequality by drawing on evidence from fifteen European countries, during a period ranging between 1980 and 1995. We focus on within-educational-levels wage inequality by estimating quantile regressions of Mincer equations and analysing the differences in returns to education across the wage distribution and across time. Four different patterns emerge: 1) a positive and increasing contribution of education upon within-levels wage inequality -the case of Portugal; 2) a positive but stable role of education in terms of inequality - Austria, Finland, France, Ireland, Netherlands, Norway, Spain, Sweden, Switzerland, UK; 3) a neutral role - Denmark and Italy; and 4) a negative impact - Germany and Greece. We thus find that in most countries dispersion in earnings increases with educational levels and that education is a risky investment. These results suggest a positive interaction between schooling and ability with respect to earnings.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 120.

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Length: 58 pages
Date of creation: Feb 2000
Date of revision:
Publication status: published in: Labour Economics, 2004, 11 (3), 355-371
Handle: RePEc:iza:izadps:dp120
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