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Is Education Used as a Signaling Device for Productivity in Developing Countries? Evidence from Ghana

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  • Strobl, Eric

    () (Aix-Marseille University)

Abstract

This paper investigates whether education is used as a signaling device for worker productivity in developing countries. To do such we employ a simple test of employer learning on Ghana manufacturing data. We find no evidence of educational signaling for individuals who were hired through direct contacts in the firm, and thus for workers for which employers arguably have more information about their true abilities. In contrast, education acts as signal for workers who were hired through more formal channels, although only for those that do not receive on-the-job-training.

Suggested Citation

  • Strobl, Eric, 2003. "Is Education Used as a Signaling Device for Productivity in Developing Countries? Evidence from Ghana," IZA Discussion Papers 683, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp683
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    References listed on IDEAS

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    1. Kelly Bedard, 2001. "Human Capital versus Signaling Models: University Access and High School Dropouts," Journal of Political Economy, University of Chicago Press, vol. 109(4), pages 749-775, August.
    2. James W. Albrecht & Jan C. Van Ours, 2006. "Using Employer Hiring Behavior to Test the Educational Signaling Hypothesis," Scandinavian Journal of Economics, Wiley Blackwell, vol. 108(3), pages 361-372, October.
    3. Byrne, David & Strobl, Eric, 2004. "Defining unemployment in developing countries: evidence from Trinidad and Tobago," Journal of Development Economics, Elsevier, vol. 73(1), pages 465-476, February.
    4. Bauer, Thomas K. & Haisken-DeNew, John P., 2001. "Employer learning and the returns to schooling," Labour Economics, Elsevier, vol. 8(2), pages 161-180, May.
    5. Andrew Weiss, 1995. "Human Capital vs. Signalling Explanations of Wages," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 133-154, Fall.
    6. Henry S. Farber & Robert Gibbons, 1996. "Learning and Wage Dynamics," The Quarterly Journal of Economics, Oxford University Press, vol. 111(4), pages 1007-1047.
    7. Layard, Richard & Psacharopoulos, George, 1974. "The Screening Hypothesis and the Returns to Education," Journal of Political Economy, University of Chicago Press, vol. 82(5), pages 985-998, Sept./Oct.
    8. Hashimoto, Masanori, 1981. "Firm-Specific Human Capital as a Shared Investment," American Economic Review, American Economic Association, vol. 71(3), pages 475-482, June.
    9. Behrman, Jere R., 1999. "Labor markets in developing countries," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 43, pages 2859-2939 Elsevier.
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    12. Albrecht, James W., 1981. "A procedure for testing the signalling hypothesis," Journal of Public Economics, Elsevier, vol. 15(1), pages 123-132, February.
    13. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863 Elsevier.
    14. Psacharopoulos, George, 1979. "On the weak versus the strong version of the screening hypothesis," Economics Letters, Elsevier, vol. 4(2), pages 181-185.
    15. Harley Frazis, 2002. "Human capital, signaling, and the pattern of returns to education," Oxford Economic Papers, Oxford University Press, vol. 54(2), pages 298-320, April.
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    Cited by:

    1. Yuki, Kazuhiro, 2009. "Education, Signaling, and Wage Inequality in a Dynamic Economy," MPRA Paper 16982, University Library of Munich, Germany.

    More about this item

    Keywords

    on-the-job-training; educational sorting; Ghana;

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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