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The Screening Hypothesis and the Returns to Education (1974)

In: Tackling Inequality

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  • G. Psacharopoulos

Abstract

The productive role of education has been questioned before, but is now under unusually heavy attack from the ‘screening hypothesis.’ If true, this hypothesis has quite devastating implications for educational policy and research. Broadly, it says that the earnings differentials associated with education do not mainly reflect improvements in individual productive capacity caused by education but, rather, employers’ use of education to identify preexisting differences in talents. If education has any social value, it is as a signaling device which helps to place the right man in the right job. But even in this case, too much education is likely to be sought, with the private returns to education exceeding the social returns.

Suggested Citation

  • G. Psacharopoulos, 1999. "The Screening Hypothesis and the Returns to Education (1974)," Palgrave Macmillan Books, in: Tackling Inequality, chapter 9, pages 155-171, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-37528-4_9
    DOI: 10.1057/9780230375284_9
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