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Schooling as Human Capital or a Signal: Some Evidence

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  • Eugene A. Kroch
  • Kriss Sjoblom
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    Abstract

    A new way is proposed to distinguish between the human capital and the signaling theories of the value of education. If education is a signal, then the essence of the signal should be distilled in the position of an individual in the distribution of education for his cohort. Estimating earnings equations that include both absolute (years) and relative (percentile) measures of education provides a test of the two competing theories. Analyzing two separate panel data sources under a range of alternative specifications, we find that the years measure of schooling has a consistently significant positive effect on earnings, but that the rank measure rarely does. This evidence supports the conclusion that human capital rather than signaling is the predominant explanation of schooling's value.

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    Bibliographic Info

    Article provided by University of Wisconsin Press in its journal Journal of Human Resources.

    Volume (Year): 29 (1994)
    Issue (Month): 1 ()
    Pages: 156-180

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    Handle: RePEc:uwp:jhriss:v:29:y:1994:i:1:p:156-180

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    Web page: http://jhr.uwpress.org/

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    Cited by:
    1. 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.
    2. Alexander J. Cowell, 2006. "The relationship between education and health behavior: some empirical evidence," Health Economics, John Wiley & Sons, Ltd., vol. 15(2), pages 125-146.
    3. Uschi Backes-Gellner & Stephan Veen, 2006. "Incentives for Schools, Educational Signals and Labour Market Outcomes," Working Papers 0061, University of Zurich, Institute for Strategy and Business Economics (ISU), revised Jun 2006.
    4. Zvi Griliches, 1996. "Education, Human Capital and Growth: A Personal Perspective," Harvard Institute of Economic Research Working Papers 1745, Harvard - Institute of Economic Research.
    5. Philip A. Trostel, 2005. "Nonlinearity in the return to education," Journal of Applied Economics, Universidad del CEMA, vol. 0, pages 191-202, May.
    6. repec:ebl:ecbull:v:9:y:2005:i:4:p:1-7 is not listed on IDEAS
    7. Dolton, P. J. & Vignoles, A., 2002. "Is a broader curriculum better?," Economics of Education Review, Elsevier, vol. 21(5), pages 415-429, October.
    8. Wagner, Robert & Zwick, Thomas, 2012. "How acid are lemons? Adverse selection and signalling for skilled labour market entrants," ZEW Discussion Papers 12-014, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    9. Perri, Timothy J., 2002. "Signaling versus contingent contracts with costly turnover," Journal of Economic Behavior & Organization, Elsevier, vol. 48(4), pages 365-374, August.
    10. Sebastian Stolorz, 2005. "A Test of the Signalling Hypothesis - Evidence from Natural Experiment," Labor and Demography 0512008, EconWPA.
    11. Steven F. Koch & S. Ssekabira Ntege, 2008. "Returns To Schooling: Skills Accumulation Or Information Revelation?," Working Papers 200812, University of Pretoria, Department of Economics.
    12. Dolton, Peter & Vignoles, Anna, 2000. "The incidence and effects of overeducation in the U.K. graduate labour market," Economics of Education Review, Elsevier, vol. 19(2), pages 179-198, April.
    13. Luisa Rosti & Chikara Yamaguchi & Carolina Castagnetti, 2005. "Educational Performance as Signalling Device: Evidence from Italy," Economics Bulletin, AccessEcon, vol. 9(4), pages 1-7.
    14. Nohora Y. Forero Ramírez & Manuel Ramírez Gómez, 2008. "Determinantes de los ingresos laborales de los graduados universitarios durante el período 2001-2004," DOCUMENTOS DE TRABAJO 004591, UNIVERSIDAD DEL ROSARIO.
    15. M. De Paola & V. Scoppa, 2007. "Returns to skills, incentives to study and optimal educational standards," Journal of Economics, Springer, vol. 92(3), pages 229-262, December.
    16. Peter Havlik & Sebastian Leitner & Robert Stehrer, 2008. "Growth Resurgence, Productivity Catching-up and Labour Demand in CEECs," wiiw Statistical Reports 3, The Vienna Institute for International Economic Studies, wiiw.
    17. Bergh, Andreas & Fink, Günther, 2009. "Higher education, elite institutions and inequality," European Economic Review, Elsevier, vol. 53(3), pages 376-384, April.
    18. Spetz, Joanne, 2002. "The value of education in a licensed profession: the choice of associate or baccalaureate degrees in nursing," Economics of Education Review, Elsevier, vol. 21(1), pages 73-85, February.

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