Returns to Postgraduate Education in Portugal:Holding on to a Higher Ground?

In this paper we use a large official employer-employee data set to document and decompose the rising graduates postgraduates’ wage differentials in Portugal. Using a non-parametric matching exercise we disentangle two different sources of postgraduates’ relative earnings: higher wages within the same type of occupations and the access to better paid occupations. We further look at displacement and deskilling effects due to relative demand inertia as possible sources of the evolution of relative earnings. Our results show that both displacement and deskilling effects, particularly of graduates with only a first-degree, appear to be at least as important as direct productivity effects in explaining postgraduates premiums. We also conclude that the relative importance of the former has been steadily increasing overtime and that, on the contrary, the net creation of high-paying, postgraduateonly jobs has been relatively modest. This evidence suggests that postgraduate degrees have largely worked as a way of holding on to a higher ground.