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Returns to education across Europe: A comparative analysis for selected EU countries

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  • Glocker, Daniela
  • Steiner, Viktor

Abstract

Incentives to invest in higher education are affected by both the direct wage effect of human capital investments and the indirect wage effect resulting from lower unemployment risks and shorter spells in unemployment associated with higher educated. We analyse the returns to education in Austria, Germany, Italy, Sweden and the United Kingdom, countries which differ significantly regarding both their education systems and labour market structure. We estimate augmented Mincerian wage equations accounting for the effects of unemployment on individual wages using EU-SILC data. Across countries we find a high variation of the effect of education on unemployment duration. Overall, the returns to education are estimated to be the highest in the UK, and the lowest for Sweden. A wage decrease due to time spent in unemployment results in a decline in the hourly wages in Austria, Germany and Italy.

Suggested Citation

  • Glocker, Daniela & Steiner, Viktor, 2011. "Returns to education across Europe: A comparative analysis for selected EU countries," Discussion Papers 2011/15, Free University Berlin, School of Business & Economics.
  • Handle: RePEc:zbw:fubsbe:201115
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    References listed on IDEAS

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    1. Mikael Lindahl & Alan B. Krueger, 2001. "Education for Growth: Why and for Whom?," Journal of Economic Literature, American Economic Association, vol. 39(4), pages 1101-1136, December.
    2. Viktor Steiner & Katharina Wrohlich, 2012. "Financial Student Aid and Enrollment in Higher Education: New Evidence from Germany," Scandinavian Journal of Economics, Wiley Blackwell, vol. 114(1), pages 124-147, March.
    3. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters,in: Schooling, Experience, and Earnings, pages 1-4 National Bureau of Economic Research, Inc.
    4. Ashenfelter, Orley & Ham, John, 1979. "Education, Unemployment, and Earnings," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 99-116, October.
    5. Frank Fossen & Daniela Glocker, 2011. "Expected future earnings, taxation, and university enrollment," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 18(6), pages 688-723, December.
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    Cited by:

    1. António Morgado & Tiago Neves Sequeira & Marcelo Santos & Alexandra Ferreira-Lopes & Ana Balcão Reis, 2016. "Measuring Labour Mismatch in Europe," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 129(1), pages 161-179, October.
    2. Eva Schlenker, 2015. "The labour supply of women in STEM," IZA Journal of European Labor Studies, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-17, December.

    More about this item

    Keywords

    Returns to education; unemployment; EU-SILC;

    JEL classification:

    • I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods

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