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Education and Signaling: Evidence from a Highly Competitive Labor Market

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  • John Heywood
  • Xiangdong Wei

Abstract

This paper directly tests for differences in returns to education between the employed and self-employed in Hong Kong. Using a step-function, we find significantly smaller returns for the self-employed, suggesting that in the highly competitive labor market of Hong Kong education plays a signaling role. This pattern persists for both genders, when accounting for self-selection into employment status and when accounting for self-employed professionals who signal.

Suggested Citation

  • John Heywood & Xiangdong Wei, 2004. "Education and Signaling: Evidence from a Highly Competitive Labor Market," Education Economics, Taylor & Francis Journals, vol. 12(1), pages 1-16.
  • Handle: RePEc:taf:edecon:v:12:y:2004:i:1:p:1-16 DOI: 10.1080/0964529042000193925
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    References listed on IDEAS

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    1. George Psacharopoulos, 1985. "Returns to Education: A Further International Update and Implications," Journal of Human Resources, University of Wisconsin Press, vol. 20(4), pages 583-604.
    2. Miller, Paul W & Mulvey, Charles & Martin, Nick, 1995. "What Do Twins Studies Reveal about the Economic Returns to Education? A Comparison of Australian and U.S. Findings," American Economic Review, American Economic Association, pages 586-599.
    3. Janankar, P.N. & Kapuscinski, C.A., 1991. "Aboriginal Employment and Unemployment : An Overview," CEPR Discussion Papers 255, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    4. Bowles, Samuel & Gintis, Herbert, 1975. "The Problem with Human Capital Theory-A Marxian Critique," American Economic Review, American Economic Association, pages 74-82.
    5. P.N. Junankar & Cezary A. Kapuscinski, 1991. "Aboriginal Employment And Unemployment An Overview," Economic Papers, The Economic Society of Australia, vol. 10(4), pages 30-43, December.
    6. Chapman, Bruce, 1997. "Conceptual Issues and the Australian Experience with Income Contingent Charges for Higher Education," Economic Journal, Royal Economic Society, vol. 107(442), pages 738-751, May.
    7. Weale, Martin, 1993. "A Critical Evaluation of Rate of Return Analysis," Economic Journal, Royal Economic Society, vol. 103(418), pages 729-737, May.
    8. Ashenfelter, Orley & Krueger, Alan B, 1994. "Estimates of the Economic Returns to Schooling from a New Sample of Twins," American Economic Review, American Economic Association, pages 1157-1173.
    9. Ashenfelter, Orley & Krueger, Alan B, 1994. "Estimates of the Economic Returns to Schooling from a New Sample of Twins," American Economic Review, American Economic Association, pages 1157-1173.
    10. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, Oxford University Press, vol. 87(3), pages 355-374.
    11. Paul M. Romer, 1994. "The Origins of Endogenous Growth," Journal of Economic Perspectives, American Economic Association, pages 3-22.
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    Cited by:

    1. Kristinn Hermannsson & Patrizio Lecca, 2016. "Human Capital in Economic Development: From Labour Productivity to Macroeconomic Impact," Economic Papers, The Economic Society of Australia, pages 24-36.
    2. Fossen, Frank M. & Büttner, Tobias J.M., 2013. "The returns to education for opportunity entrepreneurs, necessity entrepreneurs, and paid employees," Economics of Education Review, Elsevier, vol. 37(C), pages 66-84.
    3. Savanti, Maria Paula & Patrinos, Harry Anthony, 2005. "Rising returns to schooling in Argentina, 1992-2002 : productivity or credentialism?," Policy Research Working Paper Series 3714, The World Bank.
    4. Kristinn Hermannsson & Patrizio Lecca, 2014. "Human capital investment and population growth: An overlapping generations analysis for Malawi," EcoMod2014 6823, EcoMod.
    5. Carolina Castagnetti & Silvia Dal Bianco & Luisa Rosti, 2011. "Shortening university career fades the signal away. Evidence from Italy," Quaderni di Dipartimento 146, University of Pavia, Department of Economics and Quantitative Methods.
    6. repec:ebl:ecbull:v:9:y:2005:i:4:p:1-7 is not listed on IDEAS
    7. Hermannsson, Kristinn & Lecca, Patrizio, 2015. "Human Capital in Economics Development: From Labour Productivity to Macroeconomic Impact," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN 2015-53, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    8. Luisa Rosti & Chikara Yamaguchi & Carolina Castagnetti, 2005. "Educational Performance as Signalling Device: Evidence from Italy," Economics Bulletin, AccessEcon, vol. 9(4), pages 1-7.

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