Does Education Reduce Wage Inequality? Quantile Regressions Evidence from Fifteen European Countries
Pedro Telhado Pereira
Universidade da Madeira - Gestao e Economica; Institute for the Study of Labor (IZA)
Pedro S. Martins
Queen Mary College - School of Business and Management; CEG - IST; Institute for the Study of Labor (IZA)
IZA Discussion Paper No. 120
Universidade Nova de Lisboa, Faculdade de Economia, FEUNL Working Paper Series No. 379
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.
Number of Pages in PDF File: 57
JEL Classification: C29, D31, I21, J24, J31working papers series
Date posted: September 10, 2000
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