Educational Qualifications and Wage Inequality: Evidence for Europe

39 Pages Posted: 18 Oct 2005

See all articles by Santiago Budría

Santiago Budría

Universidade da Madeira

Pedro Telhado Pereira

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

Date Written: September 2005

Abstract

This paper explores the connection between education and wage inequality in nine European countries. We exploit the quantile regression technique to calculate returns to lower secondary, upper secondary and tertiary education at different points of the wage distribution. We find that returns to tertiary education are highly increasing when moving from the lower to the upper quantiles. This finding suggests that an educational expansion towards tertiary education is expected, ceteris paribus, to increase overall wage inequality through the within-dimension. Returns to secondary education are more homogeneous across quantiles, thus suggesting that an educational expansion towards secondary education is expected to have a more limited impact on within-groups dispersion. Using data from the last decades, we assess how the impact of education on wage inequality has evolved over time. We detect different trends across countries. A common feature is that the inequality increasing effect of tertiary education became more acute over the last years.

Keywords: returns to education, quantile regression, wage inequality

JEL Classification: C29, D31, I21

Suggested Citation

Budria, Santiago and Telhado Pereira, Pedro, Educational Qualifications and Wage Inequality: Evidence for Europe (September 2005). IZA Discussion Paper No. 1763. Available at SSRN: https://ssrn.com/abstract=825630

Santiago Budria (Contact Author)

Universidade da Madeira ( email )

Campus Universitario da Penteada
9000-390 Funchal
Portugal

Pedro Telhado Pereira

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

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