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Does Education Reduce Wage Inequality? Quantile Regressions Evidence from Fifteen European Countries

  • Pereira, Pedro Telhado
  • Martins, Pedro Silva

We address the impact of education upon wage inequality by drawing on evidence from fifteen European countries, during a period ranging between 1980 and 1995. We focus on within-educational-levels wage inequality by estimating quantile regressions of Mincer equations and analysing the differences in returns to education across the wage distribution and across time. Four different patterns emerge: 1) a positive and increasing contribution of education upon within-levels wage inequality the case of Portugal; 2) a positive but stable role of education in terms of inequality  Austria, Finland, France, Ireland, Netherlands, Norway, Spain, Sweden, Switzerland, UK; 3) a neutral role  Denmark and Italy; and 4) a negative impact  Germany and Greece. We thus find that in most countries dispersion in earnings increases with educational levels and that education is a risky investment. These results suggest a positive interaction between schooling and ability with respect to earnings.

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Paper provided by Universidade Nova de Lisboa, Faculdade de Economia in its series FEUNL Working Paper Series with number wp379.

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Length: 51 pages
Date of creation: 2000
Date of revision:
Handle: RePEc:unl:unlfep:wp379
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  1. 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.
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  18. David Card, 1994. "Earnings, Schooling, and Ability Revisited," Working Papers 710, Princeton University, Department of Economics, Industrial Relations Section..
  19. Eric A. Hanushek & Julie A. Somers, 1999. "Schooling, Inequality, and the Impact of Government," NBER Working Papers 7450, National Bureau of Economic Research, Inc.
  20. Mata, Jose & Machado, Jose A. F., 1996. "Firm start-up size: A conditional quantile approach," European Economic Review, Elsevier, vol. 40(6), pages 1305-1323, June.
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  22. Buchinsky, Moshe, 1994. "Changes in the U.S. Wage Structure 1963-1987: Application of Quantile Regression," Econometrica, Econometric Society, vol. 62(2), pages 405-58, March.
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  24. Fersterer, Josef & Winter-Ebmer, Rudolf, 1999. "Are Austrian Returns to Education Falling Over Time?," IZA Discussion Papers 72, Institute for the Study of Labor (IZA).
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  27. Jaume Garcia & Pedro J. Hernández & Ángel López Nicolás, 1998. "How wide is the gap? An investigation of gender wage differences using quantile regression," Economics Working Papers 287, Department of Economics and Business, Universitat Pompeu Fabra.
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