More investment, less returns? Changing returns to education in Italy across three decades

Educational expansion has often been discussed in terms of possiblydeclining returns to education. The theoretical debate provides arguments supportingboth expectations about declining and increasing returns. Declining returns wouldnot only menace individual investment strategies but also put under pressure themerit based legitimisation of existing social inequalities. In this paper we empiricallyinvestigate these changes over time.In recent years, Italy has witnessed a strong increase in education participationbeyond compulsory schooling - though this country still lags behind most of Europeregarding access to higher education. At the same time, the occupational structurehas not shown any noteworthy upward shift. We describe the trend in the associationbetween educational attainment and labour market outcomes in terms of employmentchances and occupational position based on national labour force survey data coveringthe period from 1985 to 2010. Our results for men and women aged 30-39 showa clear decline in the returns to education, in particular concerning those with anupper secondary education. However, those with a university education have also seena worsening of their occupational condition, especially in recent years.