A Fallacy of Wage Differentials: Wage Ratio in Distribution

20 Pages Posted: 18 Aug 2005

Date Written: August 2005

Abstract

This paper demonstrates a fallacy of the wage differential between educational statuses. A large number of studies have based their approaches upon the wage ratio between educational statuses. However, this wage ratio contains a simple but crucial fallacy. The wage ratio is tricky; it changes even if both the labor market and the school effects remain unchanged. Irrespective of the school effects, the wage ratio first decreases and then increases as the advancement rate increases.

Keywords: Wage ratio, wage distribution, education, human capital

JEL Classification: D31, J24, J31

Suggested Citation

Saito, Keiji, A Fallacy of Wage Differentials: Wage Ratio in Distribution (August 2005). Available at SSRN: https://ssrn.com/abstract=782685 or http://dx.doi.org/10.2139/ssrn.782685

Keiji Saito (Contact Author)

University of Tokyo ( email )

Hongo 7-3-1
Bunkyo-ku
Tokyo 113-0033, Tokyo
Japan

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