Decreasing returns to schooling in Mexico
The aim of this paper is to study the relationship between a growing better educated labour force in Mexico and labour market reward. The paper provides robust estimates of the returns to education, dealing with the ability and selectivity biases using parametric, semi-parametric, and semi nonparametric methods. The empirical strategy allows comparing the returns to education across quantiles to analyse the inequality variations within the conditional wage distribution over time. Data reveal a declining trend in the returns to education over time. Results also indicate that the inequality between the top and lower quantiles has been reduced.
Ahn, H. and J. L. Powell. 1993. Semiparametric estimation of censored selection models with a nonparametric selection mechanism, Journal of Econometrics, 58: 3-29.
Andrews, D. and M. M. A. Schafgans. 1998. Semiparametric estimation of the intercept of a sample selection model, Review of Economic Studies, 65: 497-517.
Angrist, J. D. and A. B. Krueger. 1991. Does compulsory school attendance affect schooling and earnings?, Quarterly Journal of Economics, 106: 979-1014.
Arias, O., K. F. Hallock, and W. Sosa-Escudero. 2001. Individual heterogeneity in the return to schooling: Instrumental variables quantile regression using twins data, Empirical Economics, 26: 7-40.
Ashenfelter, O. and A. Krueger. 1994. Estimates of the economic return to schooling from a new sample of twins, American Economic Review, 84(5): 1157-1173.
Becker, G. 1962. Investment in human capital: A theoretic analysis, Journal of Political Economy LXX(5): 9-49.
Becker, G. 1964. Human Capital: A Theoretical and Empirical Analysis, with Special Reference to Education, New York: Columbia University Press.
Ben-Porath, Y. 1967. The production of human capital and the life cycle of earnings, Journal of Political Economy, 75: 352-365.
Buchinsky, M. 1998. Recent advances in quantile regression models: A practical guideline for empirical research, The Journal of Human Resources, 33(1): 88-126.
Buchinsky, M. 2001. Quantile regression with sample selection: Estimating women’s return to education in the US, Empirical Economics, 26: 87-113.
Campos-Vázquez, R. M. 2013a. Efectos de los ingresos no reportados en el nivel y tendencia de la pobreza laboral en México, Ensayos Revista de Economía, XXXII(2): 23-54.
Campos-Vázquez, R. M. 2013b. Why did wage inequality decrease in Mexico after NAFTA, Economía Mexicana, XXII(2): 245-278.
Card, D. 1999. The causal effect of education on earnings, in O.C. Ashenfelter, and D. Card (eds.), Handbook of Labor Economics, vol. 3, Amsterdam: Elsevier Science.
De Luca, G. 2008. SNP and SML estimation of univariate and bivariate binarychoice models, The Stata Journal, 8(2): 190-220.
De Luca, G. and V. Perotti. 2010. Estimation of ordered response models with sample selection, CEIS Tor Vergara, Research paper series, 8(3), 168.
Esquivel, G. 2011. The dynamics of income inequality in Mexico since NAFTA, Economía, 12(1): 155-178.
Fersterer, J. and R. Winter-Ebmer. 2003. Are Austrian returns to education falling over time?, Labour Economics, 10: 73-89.
Fitzenberger, B. and C. Kurz. 2003. New insights on earnings trends across skill groups and industries in West Germany, Empirical Economics, 28: 479-514.
Flabbi, L., S. Paternostro, and E.R. Tiongson. 2007. Returns to education in the economic transition: A systematic assessment using comparable data, World Bank Policy Research, Working Paper no. 4225.
Gallant, R. and D.W. Nychka. 1987. Semi-nonparametric maximum likelihood estimation, Econometrica, 55(2): 363-390.
Gerfin, M. 1996. Parametric and semi-parametric estimation of the binary response model of labour market participation, Journal of Applied Econometrics, 11(3): 321-339.
Griliches, Z. 1977. Estimating the returns to schooling: Some econometric problems, Econometrica, 45(1): 1-22.
Gronau, R. 1974. Wage comparisons. A selectivity bias, Journal of Political Economy, 82(6): 1119-1143.
Heckman, J. J. 1979. Sample selection bias as a specification error, Econometrica, (1): 153-161.
Heckman, J. J. and E. Vytlacil. 2000. Structural equations, treatment effects, and econometric policy evaluation, Econometrica, 73(3): 669-738.
Ichimura, H. 1993. Semiparametric least squares (SLS) and weighted SLS estimation of single-index models, Journal of Econometrics, 58: 71-120.
Imbens, G. W. and J. D. Angrist. 1994. Identification and estimation of local average treatment effects, Econometrica, 62: 467-476.
Keane, M. P. and K. I. Wolpin. 1997. The career decisions of young men, Journal of Political Economy, 105(3): 473-522.
Klein, R. W. and R. H. Spady. 1993. An efficient semiparametric estimator for binary response models, Econometrica, 61(2): 387-421.
Koenker, R. and G. Bassett, Jr. 1978. Regression quantiles, Econometrica, 46(1): 33-50.
Lopez-Acevedo, G. 2006. Mexico: Two decades of the evolution of education and inequality, World Bank Policy Research, WP no. 3919.
Machado, J. A. and J. Mata. 2001. Earnings functions in Portugal 1982-1994: Evidence from quantile regressions, Empirical Economics, 26: 115-134.
Martins, M. O. F. 2001. Parametric and semiparametric estimation of sample selection models: An empirical application to the female labour force in Portugal, Journal of Applied Econometrics, 16(1): 23-39.
Martins, P. S. and P. T. Pereira. 2004. Does education reduce wage inequality?Quantile regression evidence from 16 countries, Labour Economics, 11: 355-371.
Mincer, J. 1958. Investment in human capital and personal income distribution, Journal of Political Economy, LXVI(4): 281-302.
Mincer, J. 1974. Schooling, experience, and earnings, National Bureau of Economic Research and Columbia University Press.
Murphy, K. M. and F. Welch. 1990. Empirical age-earnings profiles, Journal of Labor Economics, 8(2): 209-229.
Naticchioni, P., A. Ricci, and E. Rustichelli. 2010. Far away from a skill-biased change: Falling educational wage premia in Italy, Applied Economics, 42(26): 3383-3400.
Newey, W. K. 1988. Two step series estimation of sample selection models, MIT, WP no. 90-04.
Newey, W. K. and J. Powell. 1990. Efficient estimation of linear and type I censored regression models under conditional quantile restriction, Econometric Theory, 6(3): 295-317.
Regan, T. L., R. L. Oaxaca, and G. Burghardt. 2007. A human capital model of the effects of ability and family background on optimal schooling levels, Economic Inquiry, 45(4): 721-738.
Regan, T. L. and R. L. Oaxaca. 2009. Work experience as a source of specification error in earnings models: Implications for gender wage decompositions, Journal of Population Economics, 22: 463-499.
Robertson, R. 2004. Relative prices and wage inequality: evidence from Mexico, Journal of International Economics, 64: 387-409.
Rodriguez-Oreggia, E. 2005. Institutions, geography and the regional development of returns to schooling in Mexico, Research Institute for Sustainable Development and Social Equality (IIDSES), WP no. 8.
Schultz, T. W. 1961. Investment in human capital, American Economic Review, 51(1): 1-17.
Spence, A. M. 1973. Job market signaling, Quarterly Journal of Economics, 87: 355-374.
Weiss, A. 1995. Human capital vs. signaling explanations of wages, Journal of Economic Perspectives, 9(4): 133-154.
Abstract viewed - 1009 times
PDF downloaded: 414 times
XML downloaded: 1 times