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A Test of the Sorting Model of Education in Australia

  • Paul W. Miller

    (UWA Business School, The University of Western Australia)

  • Charles Mulvey

    (UWA Business School, The University of Western Australia)

  • Nick Martin

    (Queensland Institute of Medical Research)

In this paper we test the hypothesis advanced by Weiss (1995) that under sorting models the return to schooling across identical twins would decline over time compared to the return for the population as a whole. The analyses undertaken on a relatively large sample of Australian twins are consistent with this proposition. The pure effect of education on earnings declines with time in the labour market. This presumably occurs because with time in the labour market firms learn more about the workers and so can set pay assigning more weight to the information they acquire.

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File URL: http://ecompapers.biz.uwa.edu.au/paper/PDF%20of%20Discussion%20Papers/2004/04_12_Miller.pdf
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Paper provided by The University of Western Australia, Department of Economics in its series Economics Discussion / Working Papers with number 04-12.

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Length: 23 pages
Date of creation: 2004
Date of revision:
Handle: RePEc:uwa:wpaper:04-12
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Web page: http://www.business.uwa.edu.au/school/disciplines/economics

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  1. 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.
  2. Barry R. Chiswick & Yew Liang Lee & Paul W. Miller, 2003. "Schooling, Literacy, Numeracy and Labour Market Success," The Economic Record, The Economic Society of Australia, vol. 79(245), pages 165-181, 06.
  3. John G. Riley, 1974. "Competitive Signalling," UCLA Economics Working Papers 050, UCLA Department of Economics.
  4. Arabsheibani, G. Reza & Rees, Hedley, 1998. "On the Weak vs Strong Version of the Screening Hypothesis: A Re-Examination of the P-Test for the U.K," Economics of Education Review, Elsevier, vol. 17(2), pages 189-192, April.
  5. Joseph G. Altonji, 1995. "The Effects of High School Curriculum on Education and Labor Market Outcomes," Journal of Human Resources, University of Wisconsin Press, vol. 30(3), pages 409-438.
  6. Yew Liang Lee, 2003. "Wage Effects of Drinking in Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 36(3), pages 265-282.
  7. McNabb, Robert & Richardson, Sue, 1989. "Earnings, Education and Experience: Is Australia Different?," Australian Economic Papers, Wiley Blackwell, vol. 28(52), pages 57-75, June.
  8. Miller, Paul & Mulvey, Charles & Martin, Nick, 2001. "Genetic and environmental contributions to educational attainment in Australia," Economics of Education Review, Elsevier, vol. 20(3), pages 211-224, June.
  9. Miller, Paul & Mulvey, Charles & Martin, Nick, 1996. "Multiple Regression Analysis of the Occupational Status of Twins: A Comparison of Economic and Behavioural Genetics Models," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 58(2), pages 227-39, May.
  10. Ashenfelter, Orley & Krueger, Alan B, 1994. "Estimates of the Economic Returns to Schooling from a New Sample of Twins," American Economic Review, American Economic Association, vol. 84(5), pages 1157-73, December.
  11. Spence, A Michael, 1973. "Job Market Signaling," The Quarterly Journal of Economics, MIT Press, vol. 87(3), pages 355-74, August.
  12. Preston, Alison, 1997. "Where Are We Now with Human Capital Theory in Australia?," The Economic Record, The Economic Society of Australia, vol. 73(220), pages 51-78, March.
  13. Psacharopoulos, George, 1979. "On the weak versus the strong version of the screening hypothesis," Economics Letters, Elsevier, vol. 4(2), pages 181-185.
  14. Katz, Eliakim & Ziderman, Adrian, 1980. "On education, screening and human capital," Economics Letters, Elsevier, vol. 6(1), pages 81-88.
  15. Miller, Paul & Mulvey, Charles & Martin, Nick, 1997. "Family Characteristics and the Returns to Schooling: Evidence on Gender Differences from a Sample of Australian Twins," Economica, London School of Economics and Political Science, vol. 64(253), pages 119-36, February.
  16. 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.
  17. Orley Ashenfelter & Cecilia Rouse, 1997. "Income, Schooling, and Ability: Evidence from a New Sample of Identical Twins," NBER Working Papers 6106, National Bureau of Economic Research, Inc.
  18. McDonald, J.T. & Worswick, C., 1999. "Immigrant Assimilation in a Regulated Labour Market: unemployment of Immigrant Men in Australia," Papers 1999-03, Tasmania - Department of Economics.
  19. 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 985-98, Sept./Oct.
  20. Wolpin, Kenneth I, 1977. "Education and Screening," American Economic Review, American Economic Association, vol. 67(5), pages 949-58, December.
  21. McDonald, James Ted & Worswick, Christopher, 1999. "The Earnings of Immigrant Men in Australia: Assimilation, Cohort Effects, and Macroeconomic Conditions," The Economic Record, The Economic Society of Australia, vol. 75(228), pages 49-62, March.
  22. 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.
  23. Miller, Paul & Mulvey, Charles & Martin, Nick, 2006. "The return to schooling: Estimates from a sample of young Australian twins," Labour Economics, Elsevier, vol. 13(5), pages 571-587, October.
  24. Alba-Ramirez, Alfonso & San Segundo, Maria Jesus, 1995. "The returns to education in Spain," Economics of Education Review, Elsevier, vol. 14(2), pages 155-166, June.
  25. Miller, Paul W & Mulvey, Charles & Martin, Nick, 1995. "What Do Twins Studies Reveal about the Economic Returns to Education? A Comparison of Australian and U.S. Findings," American Economic Review, American Economic Association, vol. 85(3), pages 586-99, June.
  26. Groshen, Erica L, 1991. "Sources of Intra-industry Wage Dispersion: How Much Do Employers Matter?," The Quarterly Journal of Economics, MIT Press, vol. 106(3), pages 869-84, August.
  27. Riley, John G, 1979. "Testing the Educational Screening Hypothesis," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages S227-52, October.
  28. Andrew Weiss, 1995. "Human Capital vs. Signalling Explanations of Wages," Journal of Economic Perspectives, American Economic Association, vol. 9(4), pages 133-154, Fall.
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