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Education and Wage Inequality in Portugal

Author

Listed:
  • Budria, Santiago
  • Nunes, Celso

Abstract

This article summarises the recent literature on the relationship between inequality in wages and education for Portugal. The main conclusions are the following. First, Portu-gal is one of the OECD countries with lowest educational level. At the same time, re-turns to education are large, and suggest that skills are particularly valuable in the Por-tuguese labour market. Second, over the last two decades returns to education increased steadily, which suggests that skill-biased technological change is partly responsible for the observed pattern. Analysis of the returns across educational levels and the dispersion of returns over the wage distribution reveals that education may have helped to increase both between-group and within-group inequality. Third, the recent evolution of average years of education has lead to a considerable increase in the standard measures of over-education, particularly among younger cohorts. Since schooling mis-matches are associated with lower wages, recent changes in the educational composition of the workforce may have conse-quences for the wage distribution. Fourth, some conclusions can also be established on the interaction between formal education and acquired skills. Most forms of training are associ-ated with higher wages and appear to act as remedial education. Less educated individuals are less likely to get trained. However, once trained, they obtain larger returns. Finally, analysis of employment opportunities and school-to-work transitions suggests that more edu-cated individuals benefit from better job opportunities and receive more job offers.

Suggested Citation

  • Budria, Santiago & Nunes, Celso, 2005. "Education and Wage Inequality in Portugal," MPRA Paper 1099, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:1099
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    File URL: https://mpra.ub.uni-muenchen.de/1099/1/MPRA_paper_1099.pdf
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    References listed on IDEAS

    as
    1. Telhado Pereira, Pedro & Silva Martins, Pedro, 2002. "Is there a return-risk link in education?," Economics Letters, Elsevier, vol. 75(1), pages 31-37, March.
    2. Duncan, Greg J. & Hoffman, Saul D., 1981. "The incidence and wage effects of overeducation," Economics of Education Review, Elsevier, vol. 1(1), pages 75-86, February.
    3. Kiker, B. F. & Santos, Maria C. & de Oliveira, M. Mendes, 1997. "Overeducation and undereducation: Evidence for Portugal," Economics of Education Review, Elsevier, vol. 16(2), pages 111-125, April.
    4. Pereira, Pedro Telhado & Martins, Pedro Silva, 2000. "Does Education Reduce Wage Inequality? Quantile Regressions Evidence from Fifteen European Countries," FEUNL Working Paper Series wp379, Universidade Nova de Lisboa, Faculdade de Economia.
    5. Olga Cantó & Juan F. Jimeno & Ana Rute Cardoso & Mario Izquierdo & Carlos Farinha Rodrigues, "undated". "Integration and Inequality: Lessons from the Accessions of Portugal and Spain to the EU," Working Papers 2000-10, FEDEA.
    6. Budría, Santiago & Pereira, Pedro T., 2004. "On the Returns to Training in Portugal," IZA Discussion Papers 1429, Institute for the Study of Labor (IZA).
    7. Cardoso, Ana Rute, 1998. "Earnings Inequality in Portugal: High and Rising?," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 44(3), pages 325-343, September.
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    Citations

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    Cited by:

    1. Alvaredo, Facundo, 2009. "Top incomes and earnings in Portugal 1936-2005," Explorations in Economic History, Elsevier, vol. 46(4), pages 404-417, October.
    2. João Sousa Andrade & Adelaide Duarte & Marta Simões, 2010. "The impact of EU integration on the Portuguese distribution of employees' earnings," GEMF Working Papers 2010-08, GEMF, Faculty of Economics, University of Coimbra.
    3. Facundo Alvaredo, 2008. "Top incomes and earnings in Portugal 1936-2004," Working Papers halshs-00586795, HAL.

    More about this item

    Keywords

    Wage inequality; Returns to education; signalling; training;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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