A Comparison of the Human Capital and Signaling Models: The Case of the Self-Employed and the Increase in the Schooling Premium in the 1980's
AbstractThis paper utilizes the self-employed to analyze the observed increase in the educational earnings premium in the 1980’s. The paper compares the predictions of the signaling and human capital models in response to an exogenous demand shock such as a skill-biased technological change. Since the self-employed have no incentive to invest in a costly signal to show to employers their productivity, a change in the schooling equilibrium should not affect their earnings. Four testable hypotheses are derived. The findings suggest that the signaling model may indeed predict the observed changes in the schooling premium that are not consistent with the predictions of the human capital model.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 160.
Length: 40 pages
Date of creation: Jun 2000
Date of revision:
Publication status: published in: Research in Labor Economics, 2001, 20, 191-215
Contact details of provider:
Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org
Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Find related papers by JEL classification:
- J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Joseph E. Stiglitz, 1973.
"The Theory of 'Screening', Education, and the Distribution of Income,"
Cowles Foundation Discussion Papers
354, Cowles Foundation for Research in Economics, Yale University.
- Stiglitz, Joseph E, 1975. "The Theory of "Screening," Education, and the Distribution of Income," American Economic Review, American Economic Association, vol. 65(3), pages 283-300, June.
- Dennis J. Snower, 1998.
"Causes of changing earnings inequality,"
Proceedings - Economic Policy Symposium - Jackson Hole,
Federal Reserve Bank of Kansas City, pages 69-133.
- Betts, Julian R, 1994. "Technological Change, Sectoral Shifts and the Distribution of Earnings: A Human Capital Model," Economica, London School of Economics and Political Science, vol. 61(244), pages 475-92, November.
- McKinley L. Blackburn & David E Bloom & Richard B Freeman, 1991.
"Changes in Earnings Differentials in the 1980s: Concordance, Convergence, Causes, and Consequence,"
Economics Working Paper Archive
wp_61, Levy Economics Institute, The.
- Bloom, D.E. & Freeman, R.B. & Blackburn, M.L., 1991. "Changes in Earnings Differentials in the 1980's: Concordance , Convergence, Causes, and Consequences," Discussion Papers 1991_48, Columbia University, Department of Economics.
- McKinley L. Blackburn & David E. Bloom & Richard B. Freeman, 1991. "Changes in Earnings Differentials in the 1980s: Concordance, Convergence, Causes, and Consequences," NBER Working Papers 3901, National Bureau of Economic Research, Inc.
- Levy, Frank & Murnane, Richard J, 1992. "U.S. Earnings Levels and Earnings Inequality: A Review of Recent Trends and Proposed Explanations," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1333-81, September.
- Magnus Lofstrom, 2002.
"Labor market assimilation and the self-employment decision of immigrant entrepreneurs,"
Journal of Population Economics,
Springer, vol. 15(1), pages 83-114.
- Lofstrom, Magnus, 1999. "Labor Market Assimilation and the Self-Employment Decision of Immigrant Entrepreneurs," IZA Discussion Papers 54, Institute for the Study of Labor (IZA).
- Alan B. Krueger, 1991.
"How Computers Have Changed the Wage Structure: Evidence From Microdata, 1984-1989,"
NBER Working Papers
3858, National Bureau of Economic Research, Inc.
- Krueger, Alan B, 1993. "How Computers Have Changed the Wage Structure: Evidence from Microdata, 1984-1989," The Quarterly Journal of Economics, MIT Press, vol. 108(1), pages 33-60, February.
- Spence, A Michael, 1973. "Job Market Signaling," The Quarterly Journal of Economics, MIT Press, vol. 87(3), pages 355-74, August.
- Richard B. Freeman, 1991. "How Much Has De-Unionisation Contributed to the Rise in Male Earnings Inequality?," NBER Working Papers 3826, National Bureau of Economic Research, Inc.
- Hornig, Stephan O. & Rottmann, Horst & Wapler, Rüdiger, 2009.
"Information asymmetry, education signals and the case of Ethnic and Native Germans,"
IAB Discussion Paper
200914, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
- Stephan O. Hornig & Horst Rottmann & Rüdiger Wapler, 2009. "Information Asymmetry, Education Signals and the Case of Ethnic and Native Germans," CESifo Working Paper Series 2683, CESifo Group Munich.
- Hornig, Stephan O. & Rottmann, Horst & Wapler, Rüdiger, 2011. "Sorting on the labour market: A literature overview and theoretical framework," OTH im Dialog: Weidener Diskussionspapiere 27, University of Applied Sciences Amberg-Weiden (OTH).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak).
If references are entirely missing, you can add them using this form.