Declining Returns to Education in Norway? Comparing Estimates across Cohorts, Sectors and over Time

We examine the role of the Norwegian education system in explaining the moderate and stable earnings dispersion in Norway. Estimating earnings equations for 1980 and 1990, we find that returns to education have been remarkably stable in Norway, also when we compare returns to education across different sectors of the economy. Our analysis controls for self‐selection into education by using an instrumental variable technique. We estimate separate education earnings profiles for different cohorts to identify the effect on wage premiums of the large changes that have taken place in the Norwegian education system. The substantially higher level of educational attainment for more recent cohorts does not, cet. par., seem to have a negative effect on educational wage premiums for these younger cohorts. JEL classification: J24, J31, I