The Changing Educational Distribution and its Impact on the Evolution of Wages In Thailand, 1987-2006

Abstract

This paper uses data from Thailand’s Labour Force Surveys (LFS) from 1987 to 2006 to analyse the impact of the changing educational composition, as well as the changing returns to different education levels on male wage distribution. The Firpo, Fortin, and Lemieux decomposition method is employed in the study to untangle the components of dynamic wage structure and composition effects. Contrary to widely held beliefs, the study finds the observed increase in education to be a major factor enhancing wage inequality in the top end of the wage distribution. The study also reveals deteriorating returns to secondary education, and the recent surge in returns to higher education to exert the greatest influence on the observed evolution of wages.