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

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Author Info
Pereira, Pedro Telhado () (Universidade Nova de Lisboa, CEPR and IZA, Bonn)
Martins, Pedro Silva (Universidade Nova de Lisboa)

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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.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 120.

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Length: 57 pages
Date of creation: Feb 2000
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Handle: RePEc:iza:izadps:dp120

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Related research
Keywords: Returns to education; earnings inequality; quantile regressions; ability; education systems; labour-market institutions;

Other versions of this item:

Find related papers by JEL classification:
C29 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Other
D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
I21 - Health, Education, and Welfare - - Education - - - Analysis of Education
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    Other versions:
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    Other versions:
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Budria, Santiago, 2006. "Schooling and the distribution of wages in the european private and public sectors," MPRA Paper 90, University Library of Munich, Germany. [Downloadable!]
  2. Lauer, Charlotte, 2004. "Education, Gender and Earnings in France and Germany : Level and Dispersion Effects," ZEW Discussion Papers 04-54, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  3. Budria, Santiago & Nunes, Celso, 2005. "Education and Wage Inequality in Portugal," MPRA Paper 1099, University Library of Munich, Germany. [Downloadable!]
  4. Budria, Santiago & Telhado-Pereira, Pedro, 2005. "Educational Qualifications and Wage Inequality: Evidence for Europe," MPRA Paper 91, University Library of Munich, Germany. [Downloadable!]
    Other versions:
  5. Patrinos, Harry Anthony & Sakellariou, Chris, 2004. "Economic volatility and returns to education in Venezuela : 1992-2002," Policy Research Working Paper Series 3459, The World Bank. [Downloadable!]
    Other versions:
  6. Lilla, Marco, 2007. "Income Inequality and Education Premia," IRISS Working Paper Series 2007-11, IRISS at CEPS/INSTEAD. [Downloadable!]
  7. Erkki Koskela & Matti Virén, 2000. "Is There a Laffer Curve Between Aggregate Output and Public Sector Employment," Discussion Papers 737, The Research Institute of the Finnish Economy. [Downloadable!]
  8. Chris Sakellariou, 2004. "The use of quantile regressions in estimating gender wage differentials: a case study of the Philippines," Applied Economics, Taylor and Francis Journals, vol. 36(9), pages 1001-1007, May. [Downloadable!] (restricted)
  9. Amaghionyeodiwe, L.A. & Osinubi, T.S., 2006. "The Nigerian Educational Systems and Returns to Education," International Journal of Applied Econometrics and Quantitative Studies, Euro-American Association of Economic Development, vol. 3(1), pages 31-40. [Downloadable!]
  10. Weber, Andrea Maria & Ammermüller, Andreas, 2003. "Education and Wage Inequality in Germany : A Review of the Empirical Literature," ZEW Discussion Papers 03-29, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  11. Patrinos, Harry Anthony & Ridao-Cano, Cris & Sakellariou, Chris, 2006. "Estimating the returns to education : accounting for heterogeneity in ability," Policy Research Working Paper Series 4040, The World Bank. [Downloadable!]
  12. Budria, Santiago, 2005. "Can over-education account for the positive association between education and within-groups wage inequality? A note," MPRA Paper 92, University Library of Munich, Germany. [Downloadable!]
  13. Pedro Carneiro, 2008. "Equality of opportunity and educational achievement in Portugal," Portuguese Economic Journal, Springer, vol. 7(1), pages 17-41, April. [Downloadable!] (restricted)
  14. Erkki Koskela & Ronnie Schöb & Hans-Werner Sinn, 2000. "Green Tax Reform and Competitiveness," Discussion Papers 731, The Research Institute of the Finnish Economy. [Downloadable!]
    Other versions:
  15. Chris Sakellariou, 2005. "Profitability of Vocational vs. Formal Education for Men and Women in Singapore Using Quantile Regressions," Economic Growth centre Working Paper Series 0502, Nanyang Technolgical University, School of Humanities and Social Sciences, Economic Growth centre. [Downloadable!]
  16. Mario Izquierdo & Aitor Lacuesta, 2007. "Wage inequality in Spain - recent developments," Working Paper Series 781, European Central Bank. [Downloadable!]
  17. Lawrence Dacuycuy, 2006. "Explaining male wage inequality in the Philippines: non-parametric and semiparametric approaches," Applied Economics, Taylor and Francis Journals, vol. 38(21), pages 2497-2511, December. [Downloadable!] (restricted)
  18. Chris Sakellariou, 2005. "Heterogeneity in the Returns to Education and Experience: Evidence from a High and a Low Income S.E. Asian Country," Economic Growth centre Working Paper Series 0501, Nanyang Technolgical University, School of Humanities and Social Sciences, Economic Growth centre. [Downloadable!]
  19. Javier Gardeazabal & Arantza Ugidos, . "Measuring the gender gap at different quantiles of the wage distribution," Studies on the Spanish Economy 108, FEDEA. [Downloadable!]
  20. Pereira, Pedro Telhado & Martins, Pedro Silva, 2001. "Is there a Return-Risk Link in Education?," IZA Discussion Papers 321, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  21. Budria, Santiago, 2007. "Economic Inequality in Portugal: A Picture in the Beginnings of the 21st century," MPRA Paper 1784, University Library of Munich, Germany. [Downloadable!]
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