The choice of majors as a signaling device
This work analyzes the ability signaling hypothesis using a rich set of data of a homogeneous population -Business and Economics graduates of University X- who share similar occupations in the labor market. After studying three years of a common core curriculum, students must choose between either a Business or an Economics major. The work investigates if the choice of major is employed by the labor market as a signal of ability and of expected productivity, and if this is reflected in differences in the earnings profiles of graduates of each field. Given the detailed nature of the data, we employ an unusually rich measure of ability, namely the grades obtained in the core curriculum. This work presents multiple evidence in favor of this hypothesis. The evidence is based on seven empirical results, properly derived from a simple theoretical signaling model. The empirical facts support the signaling hypothesis under the assumption that an individual's ability is gradually revealed to the labor market as experience increases.
Volume (Year): 20 (2005)
Issue (Month): 1 (June)
|Contact details of provider:|| Postal: Erasmo Escala 1835, 6500620 Santiago|
Phone: (562) 692-0265
Fax: (562) 692-0303
Web page: http://www.economia.uahurtado.cl/
More information through EDIRC
|Order Information:|| Email: |
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.:
- Russell Davidson & James G. MacKinnon, 1981.
"Tests for Model Specification in the Presence of Alternative Hypotheses: Some Further Results,"
430, Queen's University, Department of Economics.
- MacKinnon, James G. & White, Halbert & Davidson, Russell, 1983. "Tests for model specification in the presence of alternative hypotheses : Some further results," Journal of Econometrics, Elsevier, vol. 21(1), pages 53-70, January.
- Joseph G. Altonji & Charles R. Pierret, 2001. "Employer Learning and Statistical Discrimination," The Quarterly Journal of Economics, Oxford University Press, vol. 116(1), pages 313-350.
- Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, Oxford University Press, vol. 87(3), pages 355-374.
- Cohn, Elchanan & Kiker, B. F. & De Oliveira, M. Mendes, 1987. "Further evidence on the screening hypothesis," Economics Letters, Elsevier, vol. 25(3), pages 289-294.
- Tucker, Irvin III, 1986. "Evidence on the weak and the strong versions of the screening hypothesis in the United States," Economics Letters, Elsevier, vol. 21(4), pages 391-394.
- 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.
- Arrow, Kenneth J., 1973. "Higher education as a filter," Journal of Public Economics, Elsevier, vol. 2(3), pages 193-216, July.
- Arcidiacono, Peter, 2002.
"Ability Sorting and the Returns to College Major,"
02-26, Duke University, Department of Economics.
- 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.
- Psacharopoulos, George, 1979. "On the weak versus the strong version of the screening hypothesis," Economics Letters, Elsevier, vol. 4(2), pages 181-185.
- Jaeger, David A & Page, Marianne E, 1996. "Degrees Matter: New Evidence on Sheepskin Effects in the Returns to Education," The Review of Economics and Statistics, MIT Press, vol. 78(4), pages 733-40, November.
- Groot, Wim & Oosterbeek, Hessel, 1994. "Earnings Effects of Different Components of Schooling: Human Capital versus Screening," The Review of Economics and Statistics, MIT Press, vol. 76(2), pages 317-21, May.
When requesting a correction, please mention this item's handle: RePEc:ila:anaeco:v:20:y:2005:i:1:p:23-43. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marcela Perticara)
If references are entirely missing, you can add them using this form.