Schooling, Wage Risk and Inequality* (August 31st, 2000)

Abstract: We analyse the dispersion of returns to education at sixteen Western countries during the mid-nineties by running quantile regressions of Mincer equations, with a view to addressing the link between schooling and wage risk and within-levels inequality. We find a stylised fact: returns to schooling increase over the wage distribution in an overwhelming majority of countries. Moreover, our cross-country analysis suggests that average returns are positively correlated to the education-related wage risk. These findings are consistent with the existence of over-education and/or of a positive interaction between ability and schooling. Overall, they cast some doubts on the inequality-reducing scope attributed to schooling