To the extent that the age terms capture an individual’s work experience, this suggest that work experience plays a larger role in lower-paid jobs and/or that seniority pay is more prevalent in these types of jobs. First, via a composition effect a rise in the share of highly-educated (high-wage) workers raises earnings inequality up to a certain point, but will then lower it as fewer low-education (low-wage) workers remain. Second, a rise in the share of highly-educated workers alters the returns to education, with the direction of the change depending on many factors such as the substitutability between low- and high-education workers. The empirical evidence indicates that policies to increase upper-secondary graduation rates (e.g. by providing support to pupils at risk in order to reduce drop-outs) should reduce earnings inequality.