Revisiting the returns to schooling in the Portuguese economy

This paper provides an overview of the evolution of the private returns to schooling in the Portuguese economy along the 1986-2013 period. We estimate the returns separately for men and women, at the mean and along the conditional wage distribution. Returns to schooling are found to be high, particularly for women, and to increase along the distribution. Our results point that the magnitude of the returns increased throughout the 1986-2013 period, but particularly in the 1990s. We also provide estimates of the relative wage premium associated with specific levels of educational attainment. The returns are highest for tertiary education. In the first decades under analysis, relative wage premia associated with the 9th grade stand above those estimated for secondary education, whereas in the most recent period these differences are negligible. All in all, our results suggest that education remains a profitable investment for individual agents. This is a valuable piece of information also for policymakers, who should take it into account together with the social returns to education when designing policies and incentive schemes.