the wage return to education during the recent economic crisis – an application to the netherlands

This paper examines the wage return to education in the Netherlands over the recent economic crisis (2008 – 2009). The data is based on the LISS-dataset and covers the years 2008 – 2015. The primary focus is male individuals, working full time, aged 30 – 55 years, but is extended to include young (20 – 29 years), old (56 – 65 years), part time and female workers. The wage return to education is estimated using the Mincer and wage differential model. Based on the interaction results of year dummies, unemployment rate and GDP growth rate with the level of education, it can be obtained that there is a significant decrease in the wage return to education in the years 2010 and 2013 for all individuals. However, the higher the educational level of the individual, the lower the decrease in the wage return to education. Furthermore, in line with the related literature, the wage return to education based on the instrumental variable approach is significantly higher. Also, the Heckman procedure suggests a negative sample selection due to non-response and some minor degree of positive sample selection due to non-employment. Supervisor: Associate