Exploring the Role of Labour Market Uncertainty in Explaining Differences in Rates of Return to Education in Europe

February 25, 2015

Regional and Sectoral Economic Studies, Vol. 14, No. 3, 2014, pp. 89-104

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This paper explores whether international differences in rates of return to education reflect variations in the level of risk associated with educational investments. We find no consistent evidence supporting that international differences in the rates of return to education are explained by variations in the level of market risk. For males we find that higher returns to ISCED-5 qualifications were related to a higher rate of dispersion in both the graduate and lower qualified labour markets, whereas for females we find that higher rates of return to ISCED-5 are more heavily related to general wage dispersion within the economy.