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More Detail on the Pattern of Returns to Educational Signals

Author

Listed:
  • Steffen Habermalz

    () (Department of Economics, University of Nebraska—Kearney)

Abstract

This paper develops a multiperiod model in which workers are matched with jobs according to imperfect educational signals, and their subsequent productivities depend on both their inherent ability and on the quality of the job match. The model outlines a sequential process in which underpaid employees reveal their true productivities and overpaid employees are detected by the firm until every match is perfect. The model produces increasing returns to above median educational signals early in a worker's career—a new feature that earlier models did not capture. Estimates using data from the Current Population Survey are consistent with the theoretical result and are suggestive of a concave time pattern for the returns to educational signals.

Suggested Citation

  • Steffen Habermalz, 2006. "More Detail on the Pattern of Returns to Educational Signals," Southern Economic Journal, Southern Economic Association, vol. 73(1), pages 125-135, July.
  • Handle: RePEc:sej:ancoec:v:73:1:y:2006:p:125-135
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    Citations

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    Cited by:

    1. Mora Rodríguez, Jhon James & Muro, Juan, 2015. "On the size of sheepskin effects: A meta-analysis," Economics - The Open-Access, Open-Assessment E-Journal, Kiel Institute for the World Economy (IfW), vol. 9, pages 1-18.
    2. Michael Waldman, 2012. "Theory and Evidence in Internal Labor Markets," Introductory Chapters,in: Robert Gibbons & John Roberts (ed.), The Handbook of Organizational Economics Princeton University Press.
    3. Keith A. Bender & John Douglas Satun, 2009. "Constrained By Hours And Restricted In Wages: The Quality Of Matches In The Labor Market," Economic Inquiry, Western Economic Association International, vol. 47(3), pages 512-529, July.
    4. Bitzan, John D., 2009. "Do sheepskin effects help explain racial earnings differences?," Economics of Education Review, Elsevier, vol. 28(6), pages 759-766, December.
    5. Jed DeVaro & Michael Waldman, 2012. "The Signaling Role of Promotions: Further Theory and Empirical Evidence," Journal of Labor Economics, University of Chicago Press, vol. 30(1), pages 91-147.

    More about this item

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • I20 - Health, Education, and Welfare - - Education - - - General

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