Wage differentials by fields of study among college graduates in Turkey: a decomposition analysis

Abstract

Purpose – This paper analyzesthe drivers of wage differences among male college graduates who hold a degree in a different field of study. We focus on Turkey, an emerging country that is characterized by a recentsustained expansion of higher education. Design/methodology/approach – We first estimate conditional wage gaps by field of study using OLS regressions. Average differentials are subsequently decomposed into the contribution of observable characteristics (endowment) and unexplained factors (returns). Next, we shed light on wage disparities by field of study along the wage distribution using unconditional quantile regression, by decomposing the wage gaps by fields of study by applying the Recentered Influence Function regression and decomposing the contribution of explained and unexplained factors in accounting for wage gaps along the whole distribution. Findings – The results indicate the existence of important wage differences by field of study, which are especially high for the fields of law and health. Wage differentials by college majors are mostly driven by differencesin endowments(especially occupation and, to a lesser extent, employmentsector).The share of wage differentials that can be attributed to differences in observable characteristics of workers with degrees in different fields of study varies along the unconditional wage distribution. Originality/value – This is the first study analyzing wage differentials by fields of study in Turkey using average and distributional decomposition techniques.