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

Pedro Pereira and Pedro Martins

FEUNL Working Paper Series from Universidade Nova de Lisboa, Faculdade de Economia

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.

Keywords: Returns to Education; Earnings Inequality; Quantile Regressions; Ability; Education Systems; Labour-Market Institutions. (search for similar items in EconPapers)
JEL-codes: C29 D31 I21 J24 J31 (search for similar items in EconPapers)
Date: 2000
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Working Paper: Does Education Reduce Wage Inequality? Quantile Regressions Evidence from Fifteen European Countries (2002) Downloads
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