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Signalling or Human Capital: Evidence from the Finnish Polytechnic School Reform

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  • Ulla Hämäläinen
  • Roope Uusitalo

Abstract

We use data from the Finnish polytechnic reform to distinguish between human capital and signalling theories of the value of education. We find that the reform increased the earnings of polytechnic graduates compared with those graduating from the same schools before the reform, as predicted by both the human capital and the signalling models. However, we also find that the relative earnings of vocational college graduates decrease after polytechnic graduates start entering the labour market. This finding is inconsistent with the pure human capital model and can be interpreted as evidence that supports the signalling model. Copyright © The editors of the "Scandinavian Journal of Economics" 2008 .

Suggested Citation

  • Ulla Hämäläinen & Roope Uusitalo, 2008. "Signalling or Human Capital: Evidence from the Finnish Polytechnic School Reform," Scandinavian Journal of Economics, Wiley Blackwell, vol. 110(4), pages 755-775, December.
  • Handle: RePEc:bla:scandj:v:110:y:2008:i:4:p:755-775
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    References listed on IDEAS

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    1. Roemer John E. & Silvestre Joaquim, 1993. "The Proportional Solution for Economies with Both Private and Public Ownership," Journal of Economic Theory, Elsevier, vol. 59(2), pages 426-444, April.
    2. Joaquin Silvestre, 1994. "Economic analysis of public ownership," Investigaciones Economicas, Fundación SEPI, vol. 18(1), pages 19-66, January.
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    Cited by:

    1. Oppedisano, Veruska, 2014. "Higher education expansion and unskilled labour market outcomes," Economics of Education Review, Elsevier, vol. 40(C), pages 205-220.
    2. CARRIERI, Vincenzo & D'AMATO, Marcello & ZOTTI, Roberto, 2013. "Selective Admission Tests and Students' Performances. Evidence from a Natural Experiment in a Large Italian University," CELPE Working Papers 0/00, CELPE - Centre of Labour Economics and Economic Policy, University of Salerno, Italy.
    3. Petri Böckerman & Mika Haapanen, 2013. "The effect of polytechnic reform on migration," Journal of Population Economics, Springer;European Society for Population Economics, pages 593-617.
    4. Yuki, Kazuhiro, 2009. "Education, Signaling, and Wage Inequality in a Dynamic Economy," MPRA Paper 16982, University Library of Munich, Germany.
    5. Annika C. Froehlich, 2016. "Does the curricular structure affect doctoral enrolment?," Journal of Business Economics, Springer, pages 1067-1089.
    6. Petri Böckerman & Mika Haapanen, 2011. "The effect of education on migration: evidence from school reform," ERSA conference papers ersa10p994, European Regional Science Association.
    7. Böckerman, Petri & Haapanen, Mika & Jepsen, Christopher, 2015. "Back to School? Labor-Market Returns to Vocational Postsecondary Education," IZA Discussion Papers 9079, Institute for the Study of Labor (IZA).
    8. Verena Dill & Anke Hammen, 2011. "Einkommensdifferenziale zwischen Bachelor- und Diplomabsolventen - Humankapital oder Signal?," Research Papers in Economics 2011-04, University of Trier, Department of Economics.
    9. Böckerman, Petri & Haapanen, Mika, 2010. "The effect of education on migration: Evidence from school reform," MPRA Paper 27629, University Library of Munich, Germany.

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