2021/12/07 by Alejo, Javier, Gasparini, Leonardo, Montes-Rojas, Gabriel +1
#Econometrics (econ.EM) #FOS: Economics and business
paper · doi:10.48550/arxiv.2112.03836
The `paradox of progress' is an empirical regularity that associates more education with larger income inequality. Two driving and competing factors behind this phenomenon are the convexity of the `Mincer equation' (that links wages and education) and the heterogeneity in its returns, as captured by quantile regressions. We propose a joint least-squares and quantile regression statistical framework to derive a decomposition in order to evaluate the relative contribution of each explanation. The estimators are based on the `functional derivative' approach. We apply the proposed decomposition strategy to the case of Argentina 1992 to 2015.