A Fallacy of Wage Differentials : Wage Ratio in Distribution

This paper demonstrates a fallacy of the wage differential between educational statuses. A large number of studies have based their approaches upon the wage ratio between educational statuses. However, this wage ratio contains a simple but crucial fallacy. The wage ratio is tricky; it changes even if both the labor market and the school effects remain unchanged. Irrespective of the school effects, the wage ratio first decreases and then increases as the advancement rate increases