Aggregate Unemployment Decreases Individual Returns to Education


Ammermüller, Andreas ; Kuckulenz, Anja ; Zwick, Thomas


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URL: http://ub-madoc.bib.uni-mannheim.de/1358
URN: urn:nbn:de:bsz:180-madoc-13585
Document Type: Working paper
Year of publication: 2006
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: J24 C23 ,
Subject headings (SWD): Arbeitslosigkeit , Bildung , Regionale Differenzierung
Abstract: On the basis of a theoretical model, we argue that higher aggregate unemployment affects individual returns to education. We therefore include aggregate unemployment and an interaction term between unemployment and the individual education level in a standard Mincer equation. Our results show that an increase in regional unemployment by 1% decreases the returns to education by 0.005 percentage points. This implies that higher skilled employees are better sheltered from labour market changes with respect to their jobs but encounter larger wage changes than less skilled employees. Differences in regional unemployment can in addition almost fully explain the observed large differences in regional returns to education. We use representative individual data and regional panel variation in unemployment between different German regions and for different employee groups. We demonstrate that our results are robust with respect to aggregation bias, time lags and potential endogeneity of the unemployment variable.
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Das Dokument wird vom Publikationsserver der Universitätsbibliothek Mannheim bereitgestellt.




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Ammermüller, Andreas ; Kuckulenz, Anja ; Zwick, Thomas (2006) Aggregate Unemployment Decreases Individual Returns to Education. Open Access [Working paper]
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