Gender and ethnic wage gaps have characterised Estonia\u2019s labour market since the restoration of independence. It is therefore encouraging that wage differences among younger generations are less pronounced than among older cohorts. This trend is most evident in the case of the ethnic wage gap, but a clear decline has also occurred in gender-based wage differences. It is to be hoped that Estonian society will gradually outgrow these problems. <\/p>\n\n
In Estonia, the value of education is rarely questioned. Despite comparatively lower returns to education by international standards, general upper secondary education \u2013 and the more secure pathway it offers to higher education \u2013 remains a very widespread choice among young people. Efforts to promote vocational education and to encourage practical skills acquisition instead of general upper secondary schooling have so far had limited impact. Judging by educational choices, the time invested in schooling is perceived as worthwhile. Although lower returns to education compared with other countries could eventually reduce incentives to pursue higher education, there is currently no sign of such a shift.<\/p>\n\n
The fact that returns to education tend to be higher for women than for men in Estonia carries both positive and negative implications. Higher returns may suggest that the labour market values education \u2013 that well-paid jobs are sufficiently complex to require appropriate qualifications. In this sense, the labour market rewards women for attaining higher education. However, there is also a more sobering interpretation. High-paying jobs may be accessible to men even with lower levels of education, whereas women must make a greater effort and attain higher qualifications to gain access to them. Despite higher returns to education for women, they still earn less on average than men. <\/p>\n\n
Low returns to education have two possible explanations.<\/p>\n\n