Explaining Wage Inequality in Chile: Does Education Really Matter?

Abstract

This paper decomposes wage inequality in Chile over the period 1958-1996. The evidence shows that education accounts for more than 38% of wage inequality. In addition, the return to education explains close to 80% of education's contribution. Finally, a higher convex pattern is observed in the returns to schooling over time. Thus, the importance of university education in the contribution of schooling to inequality has been increasing in the last decades. Therefore, policies aimed at providing access to higher education to poor individuals are not only expected to generate higher earnings, but also lower levels of inequality.