The decline in college wage premium in UK is not unique. In my recent paper, I found that a higher education expansion in Vietnam also led to a substantial decrease in skill premium in the long run.
What's more surprising is it isn't driven by lack of productivity growth, a 🧵
Indeed, I found that the expansion increases service firms' productivity in long run, as a result of college-educated workers moving out of agriculture and into service sector.
So if more college-educated workers boost productivity, why didn't we see higher college wage premium?
It's likely because non-college workers become more productive/more demanded as supply of college-educated workers increases.
Recall that skill premium is a function of college and non-college wages. Here we find the expansion increases non-college wage w/o hurting college wage.