Decline in values of degrees and recent evolution of wage inequality: Evidence from Chile

Abstract

Using data from nationally and regionally representative household surveys, we analyze the association between the changes in coefficients of dummy varia-bles for higher education degrees in the wage equation and evolution of wage inequality in Chile from 2013-2017. Employing a decomposition method using unconditional quantile regressions, we find that a significant decline in the coefficients of professional degrees, especially from new private universities, with a larger magnitude at upper quantiles, is associated with a substantial reduction in wage inequality. The results are robust to the correction for sample selection bias and control for workers’ occupation and firm size categories.