Does Education Raise Productivity, or Just Reflect it?
AbstractEducation has an important effect on wages but it not clear whether this is because education raises productivity or because education is simply a signal of ability. We implement a number of existing tests for discriminating between these two explanations and find that they do not support the signalling hypothesis. However, we have severe reservations about these results and we propose an alternative test based on changes in education incentives caused by changes in the minimum school leaving age in the 1970s. Using this idea we find that UK data appear to strongly support the human capital explanation. Copyright 2004 Royal Economic Society.
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Bibliographic InfoArticle provided by Royal Economic Society in its journal The Economic Journal.
Volume (Year): 114 (2004)
Issue (Month): 499 (November)
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Other versions of this item:
- Chevalier, Arnaud & Harmon, Colm & Walker, Ian & Zhu, Yu, 2003. "Does Education Raise Productivity or Just Reflect It?," CEPR Discussion Papers 3993, C.E.P.R. Discussion Papers.
- Arnaud Chevalier & Colm Harmon & Ian Walker & Yu Zhu, 2003. "Does education raise productivity, or just reflect it?," Working Papers 200304, School Of Economics, University College Dublin.
- I20 - Health, Education, and Welfare - - Education - - - General
- J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
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