THE PUZZLING FALL OF THE WAGE SKILL PREMIUM IN SPAIN

In contrast to most EU countries and other developed economies, the wage skill premium has been steadily falling between 1988-2008 in Spain. Using Spanish Social Security data we extend Dustman and Meghir work and find that the fall in the wage skill premium can be explained in part by an increase in the share of college graduates that are mismatched. However, this phenomenon only partially explains the fall in the WSP: differences between high and low-educated workers in the returns to general experience and firm tenure have been substantially reduced since the end of the 90s.