Wage and test score dispersion: some international evidence
Economics of Education Review Volume 22, Number 1 ISSN 0272-7757 Publisher: Elsevier Ltd
Previous research has shown that wage-setting institutions help explain international differences in wage inequality. We expand on this theme to explore the role that educational institutions play in determining differences in wage dispersion across countries and within countries over time. We compare the distribution of test scores at age thirteen in 1964 and 1982 and wages later in life across eleven countries. We find that wage dispersion later in life is never greater than test score dispersion. In particular, Lorenz curves for a cohort’s wages always lie above or on top of the cohort’s test score Lorenz curve. Furthermore, wage dispersion, as summarized by Gini coefficients, is significantly related to test score dispersion in the country. A general fall in test score dispersion between 1962 and 1982 appears to be reflected in reduced wage dispersion within cohorts. For three countries with available data (the US, the UK, and Japan), we find evidence of skill-biased changes in wage dispersion between the early 1970s and the late 1980s.
Bedard, K. & Ferrall, C. Wage and test score dispersion: some international evidence. Economics of Education Review, 22(1), 31-43. Elsevier Ltd.