A Comparison of the Human Capital and Signaling Models: The Case of the Self-Employed and the Increase in the Schooling Premium in the 1980's
This paper utilizes the self-employed to analyze the observed increase in the educational earnings premium in the 1980’s. The paper compares the predictions of the signaling and human capital models in response to an exogenous demand shock such as a skill-biased technological change. Since the self-employed have no incentive to invest in a costly signal to show to employers their productivity, a change in the schooling equilibrium should not affect their earnings. Four testable hypotheses are derived. The findings suggest that the signaling model may indeed predict the observed changes in the schooling premium that are not consistent with the predictions of the human capital model.
|Date of creation:||Jun 2000|
|Date of revision:|
|Publication status:||published in: Research in Labor Economics, 2001, 20, 191-215|
|Contact details of provider:|| Postal: |
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org
|Order Information:|| Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Joseph E. Stiglitz, 1973.
"The Theory of 'Screening', Education, and the Distribution of Income,"
Cowles Foundation Discussion Papers
354, Cowles Foundation for Research in Economics, Yale University.
- 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.
- McKinley L. Blackburn & David E. Bloom & Richard B. Freeman, 1991.
"Changes in Earnings Differentials in the 1980s: Concordance, Convergence, Causes, and Consequences,"
NBER Working Papers
3901, National Bureau of Economic Research, Inc.
- McKinley L. Blackburn & David E Bloom & Richard B Freeman, 1991. "Changes in Earnings Differentials in the 1980s: Concordance, Convergence, Causes, and Consequence," Economics Working Paper Archive wp_61, Levy Economics Institute.
- Levy, Frank & Murnane, Richard J, 1992. "U.S. Earnings Levels and Earnings Inequality: A Review of Recent Trends and Proposed Explanations," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1333-81, September.
- Richard B. Freeman, 1991. "How Much Has De-Unionisation Contributed to the Rise in Male Earnings Inequality?," NBER Working Papers 3826, National Bureau of Economic Research, Inc.
- Snower, Dennis J., 1999.
"Causes of Changing Earnings Inequality,"
IZA Discussion Papers
29, Institute for the Study of Labor (IZA).
- Dennis J. Snower, 1998. "Causes of changing earnings inequality," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 69-133.
- Krueger, Alan B, 1993.
"How Computers Have Changed the Wage Structure: Evidence from Microdata, 1984-1989,"
The Quarterly Journal of Economics,
MIT Press, vol. 108(1), pages 33-60, February.
- Alan B. Krueger, 1991. "How Computers Have Changed the Wage Structure: Evidence From Microdata, 1984-1989," NBER Working Papers 3858, National Bureau of Economic Research, Inc.
- Lofstrom, Magnus, 1999.
"Labor Market Assimilation and the Self-Employment Decision of Immigrant Entrepreneurs,"
IZA Discussion Papers
54, Institute for the Study of Labor (IZA).
- Magnus Lofstrom, 2002. "Labor market assimilation and the self-employment decision of immigrant entrepreneurs," Journal of Population Economics, Springer, vol. 15(1), pages 83-114.
- Spence, A Michael, 1973. "Job Market Signaling," The Quarterly Journal of Economics, MIT Press, vol. 87(3), pages 355-74, August.
- Betts, Julian R, 1994. "Technological Change, Sectoral Shifts and the Distribution of Earnings: A Human Capital Model," Economica, London School of Economics and Political Science, vol. 61(244), pages 475-92, November.
When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp160. 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: (Mark Fallak)
If references are entirely missing, you can add them using this form.