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Positional_good
2
Has education become more positional?
Educational expansion and labour market outcomes, 1985–2007
Thijs Bol, 2015
SSR Student:
Yuxin Zhang
Educational attainment
&
Labour market outcomes
Relative return
absolute return
Human capital model
Positional model
Concepts
How the effect of education changes with educational
expansion?
Given that the educational distribution varies between time and place, the value of a particular level of education is strongly context-dependent.
The educational payoff in the labour market depends on the educational composition of the other jobseekers.
Education is an important form of
human capital accumulation:
more education leads to more skills and thus higher wages.
Generally underlies that individuals with equal skills should, and will, be rewarded equally.
When entering the labour market, education is expected to generate an absolute return: each person with the same amount of skill should receive the same wage.
Research question
With increasing levels of educational expansion, the impact of either an absolute or a relative measurement of education on labour market returns increases.
Methods
Data & Measures
Two-level random effects models
Data
Source:
International Social Survey Programme (ISSP) from 1985 to 2007
Analytical sample:
51,211 individuals age 20-35
28 countries
individuals nested in country-specific survey years
Dependent variable- relative income position
within coutry-survey years
Standardised income -1 ~ +1
(0 = median income)
Independent variable-
Educational positions
Individual level
Standardized
Absolute educational position:
the amount of years spent in formal education
Relative educational position:
years of schooling into a proportional score for each country-cohort combination
(percentile position, ranging from 0 to 100)
Variables
Contextual level
Controls
- Gender
- Marital status
- Employment status
(part-time=1, fulltime=0)
- Work experience
(number of years since an individual exited formal education)
Educational expansion at the country-cohort level:
the number of students enrolled in tertiary education as a proportion of the total enrollment (Data from CNTDA)
Controls
- between-country heterogeneity
(by adding fixed effects for countries)
Table 1. Model for both absolute & relative measures of education (income as DV)
Results
Figure 1. Marginal effects of years of education on income as education expands
Figure 2. Marginal effects of relative education on income as education expands
Non-significant
Education becomes increasingly positional
Labour market rewards do not primarily depend on absolute educational levels, but instead on workers'
relative positions in the labour market.
Conclusion
Absolute levels still matter!
Limits
- Country differences are ignored
- Imperfect income data from ISSP