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Returns To Schooling: Skills Accumulation Or Information Revelation?

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  • Steven F. Koch

    ()
    (Department of Economics, University of Pretoria)

  • S. Ssekabira Ntege

    ()
    (Department of Transportation, South Africa)

Abstract

This paper explores the degree to which imperfect information in the labour market regarding worker quality is likely to impact employment opportunities, as well as the wages associated with those opportunities. The primary purpose of this paper is to provide preliminary empirical evidence that market imperfections exist in South Africa's labour market, that those imperfections could be based on asymmetric private information, and that market participants pursue information gathering and revelation strategies to help mitigate the negative effects of the information asymmetries.

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Bibliographic Info

Paper provided by University of Pretoria, Department of Economics in its series Working Papers with number 200812.

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Length: 39 pages
Date of creation: Jun 2008
Date of revision:
Handle: RePEc:pre:wpaper:200812

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Keywords: Information asymmetry; signalling; screening; returns education;

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References

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  1. 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.
  2. Schmertmann, Carl P., 1994. "Selectivity bias correction methods in polychotomous sample selection models," Journal of Econometrics, Elsevier, vol. 60(1-2), pages 101-132.
  3. Haroon Bhorat, 2000. "Wage premia and wage differentials in the South African labour market," Working Papers 00043, University of Cape Town, Development Policy Research Unit.
  4. Joseph G. Altonji & Charles R. Pierret, . "Employer Learning and Statistical Discrimination," IPR working papers 97-18, Institute for Policy Resarch at Northwestern University.
  5. Wolpin, Kenneth I, 1977. "Education and Screening," American Economic Review, American Economic Association, vol. 67(5), pages 949-58, December.
  6. Gordon Dahl, 1997. "Mobility and the Returns to Education: Testing A Roy Model With Multiple Markets," Working Papers 760, Princeton University, Department of Economics, Industrial Relations Section..
  7. Richard Blundell & Lorraine Dearden & Costas Meghir & Barbara Sianesi, 1999. "Human capital investment: the returns from education and training to the individual, the firm and the economy," Fiscal Studies, Institute for Fiscal Studies, vol. 20(1), pages 1-23, March.
  8. Spence, A Michael, 1973. "Job Market Signaling," The Quarterly Journal of Economics, MIT Press, vol. 87(3), pages 355-74, August.
  9. Bauer, Thomas K. & Haisken-DeNew, John P., 2001. "Employer learning and the returns to schooling," Labour Economics, Elsevier, vol. 8(2), pages 161-180, May.
  10. Monojit Chatterji & Paul T. Seaman & Larry D. Singell Jr., 2003. "A test of the signalling hypothesis," Oxford Economic Papers, Oxford University Press, vol. 55(2), pages 191-215, April.
  11. Taubman, Paul J & Wales, Terence J, 1973. "Higher Education, Mental Ability, and Screening," Journal of Political Economy, University of Chicago Press, vol. 81(1), pages 28-55, Jan.-Feb..
  12. Moll, Peter G, 1996. "The Collapse of Primary Schooling Returns in South Africa 1960-90," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 58(1), pages 185-209, February.
  13. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January.
  14. F. S. Barker, 1999. "On South African Labour Policies," South African Journal of Economics, Economic Society of South Africa, vol. 67(1), pages 1-14, 03.
  15. Oosterbeek, Hessel, 1992. "Study duration and earnings: A test in relation to the human capital versus screening debate," Economics Letters, Elsevier, vol. 40(2), pages 223-228, October.
  16. 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.
  17. Kristin F. Butcher & Cecilia Elena Rouse, 2001. "Wage effects of unions and industrial councils in South Africa," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 54(2), pages 349-374, January.
  18. François Bourguignon & Martin Fournier & Marc Gurgand, 2004. "Selection Bias Corrections Based on the Multinomial Logit Model: Monte-Carlo Comparisons," DELTA Working Papers 2004-20, DELTA (Ecole normale supérieure).
  19. Martin Wittenberg, 2007. "Dissecting post-apartheid labour market developments: Decomposing a discrete choice model while dealing with unobservables," Working Papers 46, Economic Research Southern Africa.
  20. Thomas Hertz, 2003. "Upward Bias in the Estimated Returns to Education: Evidence from South Africa," American Economic Review, American Economic Association, vol. 93(4), pages 1354-1368, September.
  21. Lee, Lung-Fei, 1983. "Generalized Econometric Models with Selectivity," Econometrica, Econometric Society, vol. 51(2), pages 507-12, March.
  22. Michaud, Pierre-Carl & Vencatachellum, Desire, 2003. "Human Capital Externalities in South Africa," Economic Development and Cultural Change, University of Chicago Press, vol. 51(3), pages 603-28, April.
  23. Brown, Sarah & Sessions, John G., 1999. "Education and employment status: a test of the strong screening hypothesis in Italy," Economics of Education Review, Elsevier, vol. 18(4), pages 397-404, October.
  24. Mwabu, Germano & Schultz, T Paul, 1996. "Education Returns across Quantiles of the Wage Function: Alternative Explanations for Returns to Education by Race in South Africa," American Economic Review, American Economic Association, vol. 86(2), pages 335-39, May.
  25. 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.
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Cited by:
  1. Nnaemeka Chukwuone & Ebele Amaechina & Sunday Emeka Enebeli-Uzor & Evelyn Iyoko & Benjamin Okpukpara, 2012. "Analysis of Impact of Remittance on Poverty in Nigeria," Working Papers PMMA 2012-09, PEP-PMMA.

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