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Incentives for Schools, Educational Signals and Labour Market Outcomes

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  • Uschi Backes-Gellner

    ()
    (Institute for Strategy and Business Economics, University of Zurich)

  • Stephan Veen

    ()
    (Institute for Strategy and Business Economics, University of Zurich)

Abstract

Central exams have been discussed as an incentive to improve educational outcomes. In our paper we study the impact of central exams on labor market outcomes. We explain the quality choice of schools under central and non-central exams and model the resulting students’ schooling decisions and employers’ wage decisions. We use the German Abitur and the variation among the German federal states with respect to central exams as a quasi experimental design. We expect the ratio of Abitur holders to increase in states without central exams and their wage premiums to decrease at the same time. In states with central exams these effects should not occur. We test our implications with official statistics on education and with the GSOEP. The first two implications are born out in the data. Finally, explanations and policy recommendations are discussed.

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File URL: http://repec.business.uzh.ch/RePEc/iso/leadinghouse/0009_lhwpaper.pdf
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Bibliographic Info

Paper provided by University of Zurich, Institute for Strategy and Business Economics (ISU) in its series Economics of Education Working Paper Series with number 0009.

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Length: 40 pages
Date of creation: Jun 2006
Date of revision: Jun 2006
Handle: RePEc:iso:educat:0009

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Keywords: Education Economics; School choice; Incentives for Schools; Central Exams; Economic impact; Labor Market Outcome;

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References

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  1. Hendrik Jürges & Kerstin Schneider, 2004. "International Differences in Student Achievement: An Economic Perspective," German Economic Review, Verein für Socialpolitik, vol. 5(3), pages 357-380, 08.
  2. Miller, Paul W. & Mulvey, Charles & Martin, Nick, 2004. "A test of the sorting model of education in Australia," Economics of Education Review, Elsevier, vol. 23(5), pages 473-482, October.
  3. Bishop, John H, 1997. "The Effect of National Standards and Curriculum-Based Exams on Achievement," American Economic Review, American Economic Association, vol. 87(2), pages 260-64, May.
  4. Andrew Weiss, 1995. "Human Capital vs. Signalling Explanations of Wages," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 133-154, Fall.
  5. Anabela Botelho & Lígia Pinto, 2003. "Students' expectations of the economic returns to college education Results of a controlled experiment," NIMA Working Papers 27, Núcleo de Investigação em Microeconomia Aplicada (NIMA), Universidade do Minho.
  6. Audrey Light & Wayne Strayer, 2004. "Who Receives the College Wage Premium?: Assessing the Labor Market Returns to Degrees and College Transfer Patterns," Journal of Human Resources, University of Wisconsin Press, vol. 39(3).
  7. Giorgio Brunello & Claudio Lucifora & Rudolf Winter-Ebmer, 2004. "The Wage Expectations of European Business and Economics Students," Journal of Human Resources, University of Wisconsin Press, vol. 39(4).
  8. Hendrik Jürges & Kerstin Schneider, 2005. "Dynamische Lohneffekte beruflicher Weiterbildung," MEA discussion paper series 05092, Munich Center for the Economics of Aging (MEA) at the Max Planck Institute for Social Law and Social Policy.
  9. Eugene A. Kroch & Kriss Sjoblom, 1994. "Schooling as Human Capital or a Signal: Some Evidence," Journal of Human Resources, University of Wisconsin Press, vol. 29(1), pages 156-180.
  10. Ludger Woessmann, 2004. "The Effect Heterogeneity of Central Exams: Evidence from TIMSS, TIMSS-Repeat and PISA," CESifo Working Paper Series 1330, CESifo Group Munich.
  11. Wikstrom, Christina & Wikstrom, Magnus, 2005. "Grade inflation and school competition: an empirical analysis based on the Swedish upper secondary schools," Economics of Education Review, Elsevier, vol. 24(3), pages 309-322, June.
  12. Effinger, M.R. & Polborn, M.K., 1997. "A Model of Vertically Differenciated Education," Papers 97.469, Toulouse - GREMAQ.
  13. Costrell, Robert M, 1994. "A Simple Model of Educational Standards," American Economic Review, American Economic Association, vol. 84(4), pages 956-71, September.
  14. Spence, A Michael, 1973. "Job Market Signaling," The Quarterly Journal of Economics, MIT Press, vol. 87(3), pages 355-74, August.
  15. Webbink, Dinand & Hartog, Joop, 2004. "Can students predict starting salaries? Yes!," Economics of Education Review, Elsevier, vol. 23(2), pages 103-113, April.
  16. Bishop, J., 1997. "The Effect of national Standards and Curriculum-Based Exams on Achievement," Papers 97-01, Cornell - Center for Advanced Human Resource Studies.
  17. John H. Tyler & Richard J. Murnane & John B. Willett, 2000. "Estimating The Labor Market Signaling Value Of The GED," The Quarterly Journal of Economics, MIT Press, vol. 115(2), pages 431-468, May.
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Cited by:
  1. Giuseppe Migali & Steve Bradley, 2012. "The direct and indirect effects of education policy on school and post school outcomes," Working Papers 24958831, Lancaster University Management School, Economics Department.

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