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On the interpretation of diploma wage effects estimated by regression discontinuity designs

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  • Georg Graetz

Abstract

Several recent papers employ regression discontinuity (RD) designs to estimate the causal effect of a diploma or similar credentials on wages. I build a model of knowledge acquisition, test‐taking and labour market careers that mimics the settings studied in these papers. I show that a positive RD estimate is evidence for information frictions in the labour market, but caution that the relative importance of acquired knowledge and innate talent in the production function cannot be separately identified. While a positive RD estimate does not reveal whether students study too much or too little compared to the social optimum, the rate at which RD estimates decline with labour market experience indicates the speed of employer learning, a parameter that is critical for the extent of inefficiency in study choices. Interprétation des effets salariaux d’un diplôme : évaluations par modèles de régression sur discontinuité. Plusieurs articles récents utilisent des modèles de régression sur discontinuité (RD) afin d’évaluer l’incidence salariale d’un diplôme ou de toute autre qualification similaire. Ici, j’ai élaboré un modèle relatif à l’acquisition des connaissances, au passage des examens et aux carrières professionnelles dont les paramètres sont calqués sur ceux des RD étudiés dans cet article. Je montre que lorsqu’un modèle RD établit une relation positive, cela soutient l’idée qu’il existe des frictions informationnelles sur le marché du travail, même si l’importance relative des connaissances acquises et des talents innés en rapport avec la fonction productive ne peut être distinguée. Et tandis qu’un modèle RD positif n’indique en aucun cas si les étudiants ont suffisamment travaillé ou non par rapport à l’optimum social, la rapidité à laquelle les modèles RD décroissent avec l’expérience professionnelle montrent la vitesse à laquelle les employeurs jaugent les aptitudes des employés, un paramètre essentiel pour comprendre l’ampleur de l’inefficacité des choix en matière d’études.

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  • Georg Graetz, 2021. "On the interpretation of diploma wage effects estimated by regression discontinuity designs," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 54(1), pages 228-258, February.
  • Handle: RePEc:wly:canjec:v:54:y:2021:i:1:p:228-258
    DOI: 10.1111/caje.12489
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    Cited by:

    1. Georg Graetz, 2023. "Imperfect Signals," CESifo Working Paper Series 10403, CESifo.
    2. Georg Graetz, 2023. "Imperfect signals," CEP Discussion Papers dp1919, Centre for Economic Performance, LSE.
    3. Mahmut Ablay & Fabian Lange, 2023. "Approaches to learn about employer learning," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 56(2), pages 343-356, May.
    4. Graetz, Georg, 2023. "Imperfect Signals," IZA Discussion Papers 16104, Institute of Labor Economics (IZA).
    5. Graetz, Georg, 2023. "Imperfect signals," Working Paper Series 2023:10, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    6. Salim Atay & Gunes A. Asik & Semih Tumen, 2024. "Impact of Graduating with Honours on Entry Wages of Economics Majors," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 86(3), pages 606-640, June.
    7. Ilse Tobback & Dieter Verhaest & Stijn Baert, 2024. "Internships, Hiring Outcomes and Underlying Mechanisms: A Stated Preferences Experiment," De Economist, Springer, vol. 172(1), pages 25-48, March.

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