The puzzling fall in the wage skill premium in Spain

Manuel Hidalgo, Sergi Jimenez-Martin and Florentino Felgueroso

No 14.07, Working Papers from Universidad Pablo de Olavide, Department of Economics

Abstract: In contrast to most EU countries and other developed economies, the Wage Skill Premium (WSP) has been steadily falling over the past decades in Spain. The main purpose of this work is to document and explain the fall in the WSP in Spain over the past two decades using Social Security data. Our estimation procedure follows and extends Dustman and Meghir (2005), which allows us to estimate the returns to various sources of experience, as well as seniority, while controlling for the likely biases and endogeneity associated with these models. The results reveal that the fall in the WSP can be explained in part by an increase in the share of college graduates that are mismatched, that is, working in positions for which they are a priori overeducated. However, this phenomenon only partially explains the fall in the WSP: differences between high and low-educated workers in the returns to all types of experiences and tenure have been substantially reduced since the end of the 90s.

Keywords: wage premium; returns to education; experience; seniority (search for similar items in EconPapers)
JEL-codes: J24 J31 J41 (search for similar items in EconPapers)
Pages: 46 pages
Date: 2014-06
New Economics Papers: this item is included in nep-eur, nep-lab and nep-ltv
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: The Puzzling Fall of the Wage Skill Premium in Spain (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:pab:wpaper:14.07

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