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

IZA Discussion Paper No. 120

Universidade Nova de Lisboa, Faculdade de Economia, FEUNL Working Paper Series No. 379

57 Pages Posted: 10 Sep 2000

See all articles by Pedro Telhado Pereira

Pedro Telhado Pereira

Universidade da Madeira - Gestao e Economica; IZA Institute of Labor Economics

Pedro S. Martins

Queen Mary College - School of Business and Management; IZA Institute of Labor Economics; New University of Lisbon

Date Written: February 2000

Abstract

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.

JEL Classification: C29, D31, I21, J24, J31

Suggested Citation

Telhado Pereira, Pedro and Martins, Pedro S., Does Education Reduce Wage Inequality? Quantile Regressions Evidence from Fifteen European Countries (February 2000). IZA Discussion Paper No. 120; Universidade Nova de Lisboa, Faculdade de Economia, FEUNL Working Paper Series No. 379 . Available at SSRN: https://ssrn.com/abstract=224218

Pedro Telhado Pereira (Contact Author)

Universidade da Madeira - Gestao e Economica ( email )

Campus Universitario da Penteada
9000-390 Funchal
Portugal
351 291 70 50 40 (Phone)
351 291 70 50 43 (Fax)

HOME PAGE: http://www.uma.pt/Privado/ppereira

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Pedro S. Martins

Queen Mary College - School of Business and Management ( email )

Mile End Road
London, E1 4NS
United Kingdom

HOME PAGE: http://webspace.qmul.ac.uk/pmartins

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

New University of Lisbon

Lisbon, 1099-085
Portugal

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