The use of formal education in Denmark 1980-1992



27

functions for all economic sectors. This is an extremely data demanding exercise, that the time
period and types of data used in this study did not allow.

In the mind of this author, however, there are no doubt, that domestic supply as well as
institutional and political factors must play an important role in explaining trends in low-skill
employment, inequality and unemployment. If technology were dominating, income trends,
inequality, and return to education in Denmark should be more like in USA, UK, and other
countries. Denmark is as open to foreign trade as other small affluent societies, and much more
open than USA. Technology available in USA and UK are also available in Denmark, and it
can be used if it improves productivity and rises income. In addition, nothing prevents high
educated Danes from leaving the public sector, starting high-tech export businesses in order
to rise their level of income. Almost the opposite, however, is revealed by data: Danish exports
preformed relatively well from 1980 to 1992 with the use of primarily low and medium
educated labour. On the other side of the same coin: Nothing prevents importers from
importing goods from foreign low-wage firms, and nothing prevent Danish firms from out-
sorting low-skill production to other countries. Date reveals that they don’t.

In this study no formal education include all Danes who did not complete formal education
after mandatory school/high school and they were also named
low-skilled or un-skilled. These
labels are strictly relative to other Danish educational groups. Within the group of Danes with
no formal education there are large differences in real human capital. Most Danes with no
formal education know very well to read, write, do arithmetic, operate computers, and many
of them speak foreign languages. The fact that they perform better on the labour market than
their US and UK counterparts may indicate that Danish mandatory schools/high school do
better than the US and UK schools. It may be the educational achievements at the bottom of
the distribution that count, as also indicated by Nickell and Bell (1996) in a comparison of
US/UK wages and employment to their German counterparts. This however, is an issue
beyond the scope of this study.

Inequality in US compared to Europe especially goes for the bottom of the distribution; lower
10 percent compared average (Blau & Kahn 1996). As more than 40 percent of all 15-59 year
old Danes (excl. students and pupil) belong to the group with
no formal education it may be



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