Scandinavian Working Papers in Economics

SSE/EFI Working Paper Series in Economics and Finance,
Stockholm School of Economics

No 6: Changes in the Rate of Return to Education in Sweden: 1968-1991

Mårten Palme () and Robert E. Wright
Additional contact information
Mårten Palme: Dept. of Economic Statistics, Stockholm School of Economics, Postal: Stockholm School of Economics, P.O. Box 6501, 113 83 Stockholm, Sweden

Abstract: This paper estimates and documents changes in the rate of return to education in Sweden between 1968 and 1991. Both the "quantity" (i.e.) years of schooling completed) and "quality" (i.e. education level obtained) dimensions of education are considered. These returns are calculated by estimating human capital wage equations. The data used are from the 1968, 1981 and 1991 Swedish Level of Living Surveys. There are three main conclusions. The first is that the rate of return to education declined considerably between 1968 and 1981. However, since 1981 there has been little change. The second is that the magnitude of the decline was not the same for all levels of education, with the decline being particularly pronounced for university education. The third is that the decline was not equally shared between men and women, with the decline being larger for women.

Keywords: Education wage premium; male-female wage differentials; spline functions

JEL-codes: J31

25 pages, January 1994

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