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Educational Qualifications and Wage Inequality: Evidence for Europe

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  • Budría, Santiago

    (Universidad Nebrija)

  • Pereira, Pedro T.

    (University of Madeira)

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 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, ceteris paribus, to increase overall wage inequality through the withindimension. Returns to secondary education are more homogeneous across quantiles, thus suggesting that an educational expansion towards secondary education is expected to have a more limited impact on within-groups dispersion. Using data from the last decades, we assess how the impact of education on wage inequality has evolved over time. We detect different trends across countries. A common feature is that the inequality increasing effect of tertiary education became more acute over the last years.

Suggested Citation

  • Budría, Santiago & Pereira, Pedro T., 2005. "Educational Qualifications and Wage Inequality: Evidence for Europe," IZA Discussion Papers 1763, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp1763
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    More about this item

    Keywords

    wage inequality; quantile regression; returns to education;
    All these keywords.

    JEL classification:

    • C29 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Other
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education

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