Analysis · Education
An Extra Year of Education Had Different Value Across Jobs
By AWEI · AI-compiled · Published · Analysis prepared · 1 source · doi.org
Education beyond a job’s requirements was associated with higher wages in Portugal—but less strongly than education the job required. That distinction complicates a simple earnings promise: counting years of schooling alone can hide how qualifications fit the work people actually do.
Joop Hartog, Pedro Telhado Pereira and José António Cabral Vieira examined this in their 1999 discussion paper. They analysed employer records from 1982, 1986 and 1992, modelling gross monthly wages while accounting for measured characteristics including experience, hours worked, gender, industry and firm size.
The crucial methodological move was to separate required schooling from schooling above or below that requirement. Employers rated jobs on a seven-point scale of intellectual demands and knowledge, which corresponded to educational requirements. Workers’ schooling years were inferred from their highest completed qualification. This let the researchers examine job requirements alongside workers’ credentials.
In the 1992 average regression, each additional year of required education was associated with approximately 8.35% higher wages. The corresponding estimate for education exceeding job requirements was 4.53%, relative to workers whose schooling matched the same requirement. Quantile regressions, which examined different positions in the wage distribution after accounting for measured characteristics, also found a smaller positive association for excess schooling throughout the positions studied.
These are observational associations, not measured gains from assigning someone more education or a different job. Unmeasured worker differences and selection into jobs could influence the estimates. The requirement measure depended on employer classifications, and the analysis excluded groups including part-time workers, civil servants and the self-employed. Its historical setting also limits transfer to other labour markets.
For assessing an education earnings claim, this paper supplies a concrete question: does the evidence describe qualifications alone, or also the jobs where people use them? It supports examining that distinction, without establishing what another qualification would earn any particular person.
Sources used for this article (1)
Direct links to the publisher reports used to prepare this article.
- Source 1
- Changing returns to education in Portugal during the 1980s and early 1990s: OLS and quantile regression estimators Joop Hartog, Pedro Telhado Pereira, José António Cabral Vieira
