ON THE REWARDS TO EDUCATION IN SPAIN: ENDOGENEITY AND REGIONAL DIFFERENCES.

This paper presents empirical evidence on the returns to education in Spain using the Survey on the Quality of Life in the Workplace. Five waves of the survey have been pooled to build a dataset for which Mincer-type earning functions are estimated. Unlike other analyses experience is computed as actual and not potential experience, and a variable capturing periods of unemployment is also included to better approach the underlying concept, this being specially relevant given high unemployment rates in Spain and average length of these periods among certain groups. We calculate the returns to education for male workers following the simplest Mincer’s specification estimated by (a) OLS and (b) instrumental variables (IV) techniques as a means to deal with endogeneity concerns regarding schooling and find that returns to education for male salaried workers are 5.68 (OLS) and 7.37 (IV with a family background instrument) giving evidence of a slightly declining trend in the rate of return to education in Spain. The consideration of schooling attainment as qualifications allow relaxing Mincer’s underlying hypothesis of linearity of the returns to education in schooling. Evidence against this assumption is displayed. We also test the parallelism of log-earnings experience profiles across schooling levels. The empirical analysis is finally extended by focusing on regional differences.