Returns to education in the Irish youth labour market

Abstract

Using data from two large-scale household surveys in 1987 and 1994, we estimate wage equations which show substantial increases in returns to university education for young Irish workers over the period, despite the exceptional increase in numbers with these qualifications. Returns to non-degree third level certificates and diplomas fell in relative terms, but returns to qualifications obtained by those leaving school at about 16 years of age rose. We argue that the increased return to university education primarily reflects the generalised shift in demand towards skilled labour internationally and the open nature of the Irish labour market. However, a floor may have been placed under earnings for low-skilled youth by the increased generosity of income support available to them.