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Returns to Education and Wage Equations

Author

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  • Pereira, Pedro T.

    (University of Madeira)

  • Martins, Pedro S.

    (Nova School of Business and Economics)

Abstract

We show why considering a number of education-dependent covariates in the wage equation decreases coefficient of education in the wage equation. We use a meta-analysis of results for Portugal to show, empirically, that this is the case. The coefficient decreases when we use covariates that can be considered post education decisions; it is independent of the sample size, tenure and the fact of using hourly or monthly wages. At this stage the use of the simple specification of the Mincer equation for the study of total returns to education continues to hold our support.

Suggested Citation

  • Pereira, Pedro T. & Martins, Pedro S., 2001. "Returns to Education and Wage Equations," IZA Discussion Papers 298, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp298
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    References listed on IDEAS

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    1. Richard B. Freeman & James L. Medoff, 1979. "The Two Faces of Unionism," NBER Working Papers 0364, National Bureau of Economic Research, Inc.
    2. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863, Elsevier.
    3. Krueger, Alan B & Summers, Lawrence H, 1988. "Efficiency Wages and the Inter-industry Wage Structure," Econometrica, Econometric Society, vol. 56(2), pages 259-293, March.
    4. Oliver Hart & Bengt Holmstrom, 1986. "The Theory of Contracts," Working papers 418, Massachusetts Institute of Technology (MIT), Department of Economics.
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    More about this item

    Keywords

    educational economics; rate of return; Human capital;
    All these keywords.

    JEL classification:

    • C4 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics
    • I2 - Health, Education, and Welfare - - Education
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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