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Incentives for Schools, Educational Signals and Labour Market Outcomes


  • Uschi Backes-Gellner

    () (Institute for Strategy and Business Economics, University of Zurich)

  • Stephan Veen

    () (Institute for Strategy and Business Economics, University of Zurich)


Central exams have been discussed as an incentive to improve educational outcomes. In our paper we study the impact of central exams on labor market outcomes. We explain the quality choice of schools under central and non-central exams and model the resulting students’ schooling decisions and employers’ wage decisions. We use the German Abitur and the variation among the German federal states with respect to central exams as a quasi experimental design. We expect the ratio of Abitur holders to increase in states without central exams and their wage premiums to decrease at the same time. In states with central exams these effects should not occur. We test our implications with official statistics on education and with the GSOEP. The first two implications are born out in the data. Finally, explanations and policy recommendations are discussed.

Suggested Citation

  • Uschi Backes-Gellner & Stephan Veen, 2006. "Incentives for Schools, Educational Signals and Labour Market Outcomes," Economics of Education Working Paper Series 0009, University of Zurich, Department of Business Administration (IBW), revised Jun 2006.
  • Handle: RePEc:iso:educat:0009

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    References listed on IDEAS

    1. Botelho, Anabela & Pinto, Ligia Costa, 2004. "Students' expectations of the economic returns to college education: results of a controlled experiment," Economics of Education Review, Elsevier, vol. 23(6), pages 645-653, December.
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    9. Audrey Light & Wayne Strayer, 2004. "Who Receives the College Wage Premium?: Assessing the Labor Market Returns to Degrees and College Transfer Patterns," Journal of Human Resources, University of Wisconsin Press, vol. 39(3).
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    11. Ludger Wößmann, 2004. "The Effect Heterogeneity of Central Exams: Evidence from TIMSS, TIMSS-Repeat and PISA," CESifo Working Paper Series 1330, CESifo Group Munich.
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    14. Eugene A. Kroch & Kriss Sjoblom, 1994. "Schooling as Human Capital or a Signal: Some Evidence," Journal of Human Resources, University of Wisconsin Press, vol. 29(1), pages 156-180.
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    Cited by:

    1. Steve Bradley & Giuseppe Migali, 2012. "The direct and indirect effects of education policy on school and post school outcomes," Working Papers 24958831, Lancaster University Management School, Economics Department.
    2. Florian Birkenfeld, 2008. "What makes up a central exit examination?," Working Papers 065, Bavarian Graduate Program in Economics (BGPE).

    More about this item


    Education Economics; School choice; Incentives for Schools; Central Exams; Economic impact; Labor Market Outcome;

    JEL classification:

    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials


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