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Signalling and Screening in a Transition Economy: Three Empirical Models Applied to Russia

  • Andrew Clark
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    Education is the augmentation of the stock of skills, knowledge and understanding possessed either by individuals or by society as a whole. Therefore any study of the economics of education and training concerns the manner in which choices affecting this stock are made. This paper uses the Russian Longitudinal Monitoring Survey (RLMS), a household-based survey designed to measure systematically the reforms in Russia, for the years 1994-98. We examine the true function of education, whether it is productivity enhancing or whether it acts simply as a signalling device. We test two versions of the screening hypothesis, the strong screening hypothesis (SSH) and the weak screening hypothesis (WSH), by employing three empirical signalling models. Results suggest, in the case of Russia, that although there are significant and positive returns to education and training, our sample exhibits elements of the signalling effect of education. These results raise important questions in relation to who should provide education and training.

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    File URL: http://www.sml.hw.ac.uk/downloads/cert/wpa/2000/dp0003.pdf
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    Paper provided by Centre for Economic Reform and Transformation, Heriot Watt University in its series CERT Discussion Papers with number 0003.

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    Date of creation: 2000
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    Handle: RePEc:hwe:certdp:0003
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    Web page: http://www.sml.hw.ac.uk/research/cert.htm

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    1. Brown, Sarah & Sessions, John G, 1998. "Education, Employment Status and Earnings: A Comparative Test of the Strong Screening Hypothesis," Scottish Journal of Political Economy, Scottish Economic Society, vol. 45(5), pages 586-91, November.
    2. Wolpin, Kenneth I, 1977. "Education and Screening," American Economic Review, American Economic Association, vol. 67(5), pages 949-58, December.
    3. Tucker, Irvin III, 1985. "Use of the decomposition technique to test the educational screening hypothesis," Economics of Education Review, Elsevier, vol. 4(4), pages 321-326, August.
    4. Spence, Michael, 1976. "Competition in Salaries, Credentials, and Signaling Prerequisites for Jobs," The Quarterly Journal of Economics, MIT Press, vol. 90(1), pages 51-74, February.
    5. Riley, John G., 1975. "Competitive signalling," Journal of Economic Theory, Elsevier, vol. 10(2), pages 174-186, April.
    6. Stiglitz, Joseph E, 1975. "The Theory of "Screening," Education, and the Distribution of Income," American Economic Review, American Economic Association, vol. 65(3), pages 283-300, June.
    7. Cohn, Elchanan & Kiker, B. F. & De Oliveira, M. Mendes, 1987. "Further evidence on the screening hypothesis," Economics Letters, Elsevier, vol. 25(3), pages 289-294.
    8. Taubman, Paul J & Wales, Terence J, 1973. "Higher Education, Mental Ability, and Screening," Journal of Political Economy, University of Chicago Press, vol. 81(1), pages 28-55, Jan.-Feb..
    9. Brown, Sarah & Sessions, John G., 1999. "Education and employment status: a test of the strong screening hypothesis in Italy," Economics of Education Review, Elsevier, vol. 18(4), pages 397-404, October.
    10. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
    11. Psacharopoulos, George, 1979. "On the weak versus the strong version of the screening hypothesis," Economics Letters, Elsevier, vol. 4(2), pages 181-185.
    12. Riley, John G, 1979. "Testing the Educational Screening Hypothesis," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages S227-52, October.
    13. Oosterbeek, Hessel, 1993. "Evidence on screening: a comment," Economics of Education Review, Elsevier, vol. 12(1), pages 89-90, March.
    14. Grubb, W. Norton, 1993. "Further tests of screening on education and observed ability," Economics of Education Review, Elsevier, vol. 12(2), pages 125-136, June.
    15. Arrow, Kenneth J., 1973. "Higher education as a filter," Journal of Public Economics, Elsevier, vol. 2(3), pages 193-216, July.
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