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The Impact of Education on Wage Determination between Workers in Southern and Central-Northern Italy

Massimiliano Agovino and Antonio Garofalo Author-Email:
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Antonio Garofalo Author-Email: Department of Economic and Legal Studies, University of Naples ''Parthenope'', Napoli, Italy

Panoeconomicus, 2016, vol. 63, issue 1, 25-43

Abstract: The aim of this paper is to examine the earnings dynamic in Italy, in order to explain earnings differences between southern Italy and central- northern Italy. In our analysis we use different techniques: ordinary least squares (OLS), quantile regression models and the algorithm developed by Machado and Mata (2005). In particular, the Machado and Mata (2005) algo- rithm allows us to examine the relative importance of both differences in work- ers’ characteristics and in their returns in explaining southern, central and northern Italy earnings differences at a point in time, as well as across time within each macro-area. We focus on the role of differences in educational endowment and returns to education, one of the most important components of human capital in the stylised literature. The level of education determines the substantial disparities in terms of wage returns. However, this holds only for levels of education related to compulsory education.

Keywords: Quantile regression; Wage gap decomposition; Returns to educa- tion; Italy; Human capital (search for similar items in EconPapers)
JEL-codes: I21 J24 J31 J45 J71 O15 (search for similar items in EconPapers)
Date: 2016
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Handle: RePEc:voj:journl:v:63:y:2016:i:1:p:25-43