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Sheepskin Effects in the Returns to Education by Ethnic Group: Evidence from Northeastern Brazil

Author

Listed:
  • Jean-Louis ARCAND

    ()

  • Béatrice D'HOMBRES

    () (Centre d'Etudes et de Recherches sur le Développement International(CERDI))

  • Cl. PONDE AVENA

Abstract

This paper examines the relative magnitudes of "sheepskin effects" in the returns to education for the three main ethnic groups in the Metropolitan Region of Salvador (MRS), Bahia state, in Northeastern Brazil, and ascertains whether their pattern is consistent with a simple signalling model. We show that failure to account for the strong signal furnished by admission to university, which is subject to a rigorous entrance exam in Bahia state, artificially inflates the estimated rate of return to an additional year of university education and results in downward bias in the estimated sheepskin effect of completing a four-year university degree. This is especially true for blacks. Moreover, our empirical results suggest that sheepskin effects take the traditional form of an additional return to the completion of a diploma for whites, whereas for blacks the additional return stems entirely from the sheepskin-like effect associated with admission to university.

Suggested Citation

  • Jean-Louis ARCAND & Béatrice D'HOMBRES & Cl. PONDE AVENA, 2003. "Sheepskin Effects in the Returns to Education by Ethnic Group: Evidence from Northeastern Brazil," Working Papers 200326, CERDI.
  • Handle: RePEc:cdi:wpaper:450
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    File URL: http://publi.cerdi.org/ed/2003/2003.26.pdf
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    References listed on IDEAS

    as
    1. 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 733-740, November.
    2. Lundberg, Shelly J & Startz, Richard, 1983. "Private Discrimination and Social Intervention in Competitive Labor Markets," American Economic Review, American Economic Association, vol. 73(3), pages 340-347, June.
    3. Lam, David & Schoeni, Robert F, 1993. "Effects of Family Background on Earnings and Returns to Schooling: Evidence from Brazil," Journal of Political Economy, University of Chicago Press, vol. 101(4), pages 710-740, August.
    4. Harry Anthony Patrinos, 1996. "Non-linearities in the returns to education: sheepskin effects or threshold levels of human capital?," Applied Economics Letters, Taylor & Francis Journals, vol. 3(3), pages 171-173.
    5. Park, Jin Heum, 1999. "Estimation of sheepskin effects using the old and the new measures of educational attainment in the Current Population Survey," Economics Letters, Elsevier, vol. 62(2), pages 237-240, February.
    6. Oettinger, Gerald S, 1996. "Statistical Discrimination and the Early Career Evolution of the Black-White Wage Gap," Journal of Labor Economics, University of Chicago Press, vol. 14(1), pages 52-78, January.
    7. Arkes, Jeremy, 1999. "What Do Educational Credentials Signal and Why Do Employers Value Credentials?," Economics of Education Review, Elsevier, vol. 18(1), pages 133-141, February.
    8. Arrow, Kenneth J., 1973. "Higher education as a filter," Journal of Public Economics, Elsevier, vol. 2(3), pages 193-216, July.
    9. repec:fth:prinin:311 is not listed on IDEAS
    10. Belman, Dale & Heywood, John S, 1991. "Sheepskin Effects in the Returns to Education: An Examination on Women and Minorities," The Review of Economics and Statistics, MIT Press, vol. 73(4), pages 720-724, November.
    11. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, Oxford University Press, vol. 87(3), pages 355-374.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Returns to education; Sheepskin effects; Discrimination; Brazil.;

    JEL classification:

    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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