IDEAS home Printed from
   My bibliography  Save this paper

Does Speed Signal Ability , A Test of Spence's Theory


  • Thomas O. BRODATY


  • Robert J. GARY-BOBO


  • Ana PRIETO



We propose a new test for the presence of job-market signaling in the sense of Spence(1973), based on an extension of the Mincerian log-wage equation. We test the assumptionthat employers are fully informed about relevant worker characteristics vs incomplete infor-mation (i.e., signaling). Our test is based on a variable called delay, de¯ned as the residualof a regression of school-leaving age on the worker's highest degree. Making use of variousinstruments, we ¯nd a robust, signi¯cant and negative impact of delay on wages, averaged overthe ¯rst ¯ve years of career. A year of delay causes a 9% decrease of the student's wage, whileat the same time, returns to education are positive with standard values. We show that theassumption of fully informed employers is not compatible with this e®ect. The only reasonableexplanation, supported by the data, is the fact that longer delays signal unobserved but neg-ative characteristics. We ¯nally estimate a nonlinear model of education choices and cannotreject the assumption that the data is generated by a job-market signaling equilibrium.

Suggested Citation

  • Thomas O. BRODATY & Robert J. GARY-BOBO & Ana PRIETO, 2009. "Does Speed Signal Ability , A Test of Spence's Theory," Working Papers 2009-02, Center for Research in Economics and Statistics.
  • Handle: RePEc:crs:wpaper:2009-02

    Download full text from publisher

    File URL:
    File Function: Crest working paper version
    Download Restriction: no


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. 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.
    2. Triventi, Moris, 2014. "Does working during higher education affect students’ academic progression?," Economics of Education Review, Elsevier, vol. 41(C), pages 1-13.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:crs:wpaper:2009-02. 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: (Sri Srikandan). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.