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Educational Qualifications and Wage Inequality: Evidence for Europe

  • Budría, Santiago


    (Universidad Pontificia Comillas)

  • Pereira, Pedro T.


    (University of Madeira)

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.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1763.

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Length: 39 pages
Date of creation: Sep 2005
Date of revision:
Publication status: published in: Revista de Economía Aplicada, 2011, 56 (19), 5-34
Handle: RePEc:iza:izadps:dp1763
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