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More Detail on the Pattern of Returns to Educational Signals

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  • Steffen Habermalz

    ()
    (Department of Economics, University of Nebraska—Kearney)

Abstract

This paper develops a multiperiod model in which workers are matched with jobs according to imperfect educational signals, and their subsequent productivities depend on both their inherent ability and on the quality of the job match. The model outlines a sequential process in which underpaid employees reveal their true productivities and overpaid employees are detected by the firm until every match is perfect. The model produces increasing returns to above median educational signals early in a worker's career—a new feature that earlier models did not capture. Estimates using data from the Current Population Survey are consistent with the theoretical result and are suggestive of a concave time pattern for the returns to educational signals.

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Bibliographic Info

Article provided by Southern Economic Association in its journal Southern Economic Journal.

Volume (Year): 73 (2006)
Issue (Month): 1 (July)
Pages: 125–135

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Handle: RePEc:sej:ancoec:v:73:1:y:2006:p:125-135

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Web page: http://www.southerneconomic.org/
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Cited by:
  1. Jed DeVaro & Michael Waldman, 2012. "The Signaling Role of Promotions: Further Theory and Empirical Evidence," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 30(1), pages 91 - 147.
  2. Keith A. Bender & John Douglas Satun, 2009. "Constrained By Hours And Restricted In Wages: The Quality Of Matches In The Labor Market," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 47(3), pages 512-529, 07.
  3. Michael Waldman, 2012. "Theory and Evidence in Internal LaborMarkets
    [The Handbook of Organizational Economics]
    ," Introductory Chapters, Princeton University Press, Princeton University Press.
  4. Bitzan, John D., 2009. "Do sheepskin effects help explain racial earnings differences?," Economics of Education Review, Elsevier, Elsevier, vol. 28(6), pages 759-766, December.

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