published in: Economics Letters, 2007, 94 (2), 271-277
This study addresses the question: Are workers who hold a university degree increasingly
filling job openings meant for people with lower levels of schooling? It focuses on Portugal,
where the higher education system has been expanding at a fast pace and the share of
university graduates in total labour force has been increasing, but where the unemployment
rate for such workers has also been increasing. The analysis relies on a remarkable dataset
covering the entire workforce in manufacturing and services private sectors, to implement the
conceptual framework developed by Gottschalk and Hansen (2003). Results indicate that the
university wage premium increased and the proportion of university graduates working in
non-university jobs declined sharply over time. Therefore, no support is found for the
skepticism over investment in higher education. Results are consistent with the idea that skillbiased
technological progress taking place in some sectors raises the productivity of workers
with higher schooling levels, thus raising their wages, which attracts new workers with high
qualifications.
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