Lisbon, Nov. 19, 2024 (Lusa) - The average wage differential in Portugal for a worker with secondary education and higher education peaked in 2006 and 1996, respectively, and has been falling progressively ever since.
The conclusion is contained in a PlanAPP analysis note released on Tuesday, which focuses on the evolution of wages by level of education in Portugal, with a view to comparing workers with different levels of education and revealing the wage differential that is statistically attributable to differences in education between workers, an indicator called the education wage premium.
The data shows a positive association between the level of education and the wages received, as expected. However, "considering the estimates of wage premiums by level of additional education, for almost two decades there has been a reduction in the average wage premiums associated with secondary education and bachelor's degrees", concludes PlanAPP, noting that "more recently, this behaviour has been accompanied by an increase in the premiums associated with post-secondary non-tertiary education (vocational courses) and master's degrees".
According to this analysis, at the beginning of the 1990s, the salary of a worker with secondary education was, on average, 17% higher than what would be expected if they only had a 9th grade education. This differential reached its peak in 2006, that is, almost two decades ago, a period "in which it reached close to 27%, and then decreased to levels below those of 1990" in 2021, when it reached around 15%.
As for workers with higher education, the wage premium "peaked earlier, in 1996", reaching 54%, compared to workers with only secondary education. "Since then, the premium has been falling at a roughly constant rate, reaching levels close to 42% in 2021," says PlanAPP.
In an analysis based on levels of education between 2010 and 2021, PlanAPP concludes that "the fall in the higher education wage premium has been led only by the bachelor's degree, given that the master's and doctorate premiums have increased (although there is no clear statistical evidence for this increase in the latter case, given the size of the reliability intervals," they emphasise.
Thus, if at the beginning of the 2010s, "a bachelor's degree offered a salary premium of around 47% compared to secondary education", by 2021 that figure had fallen to 40%.
As for the "upward trend in the wage premium in non-tertiary post-secondary education" and in relation to workers with secondary education between 2010 and 2021, this was only driven by the wage premium for men.
PlanAPP also used a methodology to highlight the differences between individual workers in terms of the premiums earned at each level of education, and found that between 2010 and 2021, workers with secondary education and university degrees earning lower premiums increased their relative weight among workers with the same level of education, although very high premiums did not disappear. "As a result, these levels of education have become more unequal in terms of the wage premium associated with them (albeit only slightly in the case of bachelor's degrees)," they warn.
And, according to PlanAPP, the "decline in the education wage premium is especially noticeable in wages on entry to the labour market".
"It also recognises the importance of specific branches of activity (more intensive in knowledge and technology) in shaping the higher wage premium ranges, along with a significant disparity between different branches of services and industry. There are also significant disparities in the wage premiums associated with different fields of study. Areas such as information and communication technologies (ICT), exact and health sciences and engineering tend to have higher wage premiums. Business sciences and law are also noteworthy, especially at master's level," the organisation notes.
The analysis also reveals that the composition of the labour market "has changed substantially in recent decades", with citizens' level of education increasing: between 1991 and 2021, the proportion of workers with basic education fell by almost half (from 85% to 45% of the total), while the proportion of workers with higher education increased tenfold (to nearly 25% of the total).
And if we look specifically at workers with higher education, between 2010 and 2021 there was a "significant increase in workers with master's degrees", rising from 5.7% of the total to 22.1% in that period.
JMF/AYLS // AYLS
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