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Is Education Used as a Signaling Device for Productivity in Developing Countries? Evidence from Ghana

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  • Strobl, Eric

    ()
    (Ecole Polytechnique, Paris)

Abstract

This paper investigates whether education is used as a signaling device for worker productivity in developing countries. To do such we employ a simple test of employer learning on Ghana manufacturing data. We find no evidence of educational signaling for individuals who were hired through direct contacts in the firm, and thus for workers for which employers arguably have more information about their true abilities. In contrast, education acts as signal for workers who were hired through more formal channels, although only for those that do not receive on-the-job-training.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 683.

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Length: 18 pages
Date of creation: Jan 2003
Date of revision:
Publication status: published as "Do employers use education as a signal for ability in developing countries? Evidence from Ghana" in: Applied Economics Letters, 2004, 11(4), 259-261
Handle: RePEc:iza:izadps:dp683

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Keywords: on-the-job-training; educational sorting; Ghana;

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References

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  1. Behrman, Jere R., 1999. "Labor markets in developing countries," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 43, pages 2859-2939 Elsevier.
  2. Lang, Kevin, 1994. "Does the Human-Capital/Educational-Sorting Debate Matter for Development Policy?," American Economic Review, American Economic Association, vol. 84(1), pages 353-58, March.
  3. Hashimoto, Masanori, 1981. "Firm-Specific Human Capital as a Shared Investment," American Economic Review, American Economic Association, vol. 71(3), pages 475-82, June.
  4. Kelly Bedard, 2001. "Human Capital versus Signaling Models: University Access and High School Dropouts," Journal of Political Economy, University of Chicago Press, vol. 109(4), pages 749-775, August.
  5. Henry S. Farber & Robert Gibbons, 1991. "Learning and Wage Dynamics," NBER Working Papers 3764, National Bureau of Economic Research, Inc.
  6. Harley Frazis, 2002. "Human capital, signaling, and the pattern of returns to education," Oxford Economic Papers, Oxford University Press, vol. 54(2), pages 298-320, April.
  7. Layard, Richard & Psacharopoulos, George, 1974. "The Screening Hypothesis and the Returns to Education," Journal of Political Economy, University of Chicago Press, vol. 82(5), pages 985-98, Sept./Oct.
  8. Joseph G. Altonji & Charles R. Pierret, 1997. "Employer Learning and Statistical Discrimination," NBER Working Papers 6279, National Bureau of Economic Research, Inc.
  9. Psacharopoulos, George, 1979. "On the weak versus the strong version of the screening hypothesis," Economics Letters, Elsevier, vol. 4(2), pages 181-185.
  10. Andrew Weiss, 1995. "Human Capital vs. Signalling Explanations of Wages," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 133-154, Fall.
  11. Strobl, Eric & Byrne, David, 2002. "Defining Unemployment in Developing Countries: Evidence from Trinidad and Tobago," IZA Discussion Papers 659, Institute for the Study of Labor (IZA).
  12. Albrecht, James W., 1981. "A procedure for testing the signalling hypothesis," Journal of Public Economics, Elsevier, vol. 15(1), pages 123-132, February.
  13. Bauer, Thomas K. & Haisken-DeNew, John P., 2000. "Employer Learning and the Returns to Schooling," IZA Discussion Papers 146, Institute for the Study of Labor (IZA).
  14. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863 Elsevier.
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Cited by:
  1. Yuki, Kazuhiro, 2009. "Education, Signaling, and Wage Inequality in a Dynamic Economy," MPRA Paper 16982, University Library of Munich, Germany.

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