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Regional Differences in Returns to Education in Portugal

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  • Jose Antonio Cabral Vieira

    ()

  • Joao Pedro Couto

    ()

  • Maria Teresa Tiago

    ()

Abstract

This paper analyses differences in the return to education in Portugal across regions. For this purpose, we use an extended Mincer-type wage equation. OLS regression results indicate that differences in the rewards to education are substantially different across regions. In particular, they are much higher in Lisbon than in other regions. Since the average level of education in Lisbon is much higher in Lisbon than elsewhere such a differential is attributed to the fact that the demand for educated labour is much higher in Lisbon, likely due to differences in technology. A quantile regression analysis reveals that the return to education is not constant across the whole conditional wage distribution. This is valid for the 18 regions examined, although once again the impact of education on wages is higher in Lisbon regardless the quantile we examine.

Suggested Citation

  • Jose Antonio Cabral Vieira & Joao Pedro Couto & Maria Teresa Tiago, 2006. "Regional Differences in Returns to Education in Portugal," ERSA conference papers ersa06p44, European Regional Science Association.
  • Handle: RePEc:wiw:wiwrsa:ersa06p44
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    References listed on IDEAS

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    1. Paulo Madruga & José Vieira, 2004. "Regions and Low-Wage Mobility in Portugal," ERSA conference papers ersa04p55, European Regional Science Association.
    2. David Card, 1994. "Earnings, Schooling, and Ability Revisited," Working Papers 710, Princeton University, Department of Economics, Industrial Relations Section..
    3. George Psacharopoulos & Harry Anthony Patrinos, 2004. "Returns to investment in education: a further update," Education Economics, Taylor & Francis Journals, vol. 12(2), pages 111-134.
    4. Dumond, J Michael & Hirsch, Barry T & Macpherson, David A, 1999. "Wage Differentials across Labor Markets and Workers: Does Cost of Living Matter?," Economic Inquiry, Western Economic Association International, vol. 37(4), pages 577-598, October.
    5. 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.
    6. Koenker, Roger W & Bassett, Gilbert, Jr, 1978. "Regression Quantiles," Econometrica, Econometric Society, vol. 46(1), pages 33-50, January.
    7. Bernd Fitzenberger & Claudia Kurz, 2003. "New insights on earnings trends across skill groups and industries in West Germany," Empirical Economics, Springer, vol. 28(3), pages 479-514, July.
    8. Koenker, Roger & Bassett, Gilbert, Jr, 1982. "Robust Tests for Heteroscedasticity Based on Regression Quantiles," Econometrica, Econometric Society, vol. 50(1), pages 43-61, January.
    9. Gilles Duranton & Vassilis Monastiriotis, 2002. "Mind the Gaps: The Evolution of Regional Earnings Inequalities in the U.K., 1982-1997," Journal of Regional Science, Wiley Blackwell, vol. 42(2), pages 219-256.
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