The Role of Education in the Urban Labour Market in Developing Countries: The Case of Colombia

Much has been said lately about the role of education in the labour market of developing countries.1 At the present stage of the debate, however, a general agreement seems remote. Basically, four main theories, not always in contradiction with each other, have been proposed that may be termed as ‘human capital’, ‘screening’, ‘job competition’ and ‘segmention’.2 Indeed, all of them conform with what Blaug calls the ‘universal fact’ of labour markets; that is the positive relationship between education and earnings. The difference lies in the explanations given to that relationship and, consequently, in the evaluations of educational policies. The human-capital theory considers education as a productive factor the remuneration of which is determined by supply and demand on (perfectly or imperfectly) competitive markets, whereas other theories insist upon the social discrimination role of education and, therefore, its ambiguous link with productivity. Clearly, other evidence than the positive correlation between education and earnings must be collected and other tests must be performed in order to reduce the theoretical choice about the role of education in development.