The use of formal education in Denmark 1980-1992

25

table 2 above.

Case 1 contains assumed factor remunerations for all factors in Denmark and in the rest of the
World. For people with vocational an of index 100 is assumed and for no education 20 less
and for further education 20 more). Factor prices are equalized which means:

0 ' (w &w )P X ^dg
g d dj

and we have the standard HOV model where factor content of net trade reveals factor
endowment.

Case 2 assumes compressed Danish wage structure compared to average Danish export
counties: Higher Danish wages for people with no education (only 10 less than for those with
vocational education) and lower wages for people with further education (only 10 more).
Remuneration of capital are assumed equal across countries. Applying right side of formula
16 to this yields:

wich is contradictory to the inequality in formula 16. Assuming a compressed wage structure
between groups of education in other words are not in accordance with the empirical disclosed
export patterns. The assumption is rejected by export data for 1992.

Case 3 show calculation for the opposite assumption: Relatively low wages for low educated
and relatively high wages for high educated in Denmark. The result is:

2060 ' (w &w )P X ^dg
g d dj

which correspond to the theoretical prediction in formula 16. Therefore assuming comparable
low wages for low educated Danes and high wages for highly educated is not rejected by
export data for 1992.

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