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Are school-provided skills useful at work? Results of the Wiles test

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  • Liwiński, Jacek
  • Pastore, Francesco

Abstract

We test for the signalling hypothesis versus human capital theory using the Wiles test (1974) in a country which has experienced a dramatic increase in the supply of skills. For this purpose, we construct a job match index based on the usefulness of the school-provided skills and the relevance of the job performed to the field of study. Then we regress the first earnings of graduates on this index using OLS and Heckit to control for omitted heterogeneity of the employed. The data we use come from a representative tracer survey of Poles who left secondary schools or graduated from HEIs over the period of 1998-2005. We find that only the HEI graduates obtain a wage premium from skills acquired in the course of formal education. This finding is robust to a large number of robustness checks with different indicators of the educational mismatch and instrumental variables.

Suggested Citation

  • Liwiński, Jacek & Pastore, Francesco, 2017. "Are school-provided skills useful at work? Results of the Wiles test," GLO Discussion Paper Series 151, Global Labor Organization (GLO).
  • Handle: RePEc:zbw:glodps:151
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    References listed on IDEAS

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    1. Brown, Sarah & Sessions, John G., 2006. "Evidence on the relationship between firm-based screening and the returns to education," Economics of Education Review, Elsevier, vol. 25(5), pages 498-509, October.
    2. Blaug, Mark, 1976. "The Empirical Status of Human Capital Theory: A Slightly Jaundiced Survey," Journal of Economic Literature, American Economic Association, vol. 14(3), pages 827-855, September.
    3. Floro Ernesto Caroleo & Francesco Pastore, 2012. "Overeducation at a glance. Determinants and wage effects of the educational mismatch, looking at the AlmaLaurea data," Discussion Papers 18_2012, CRISEI, University of Naples "Parthenope", Italy.
    4. Kiersztyn, Anna, 2013. "Stuck in a mismatch? The persistence of overeducation during twenty years of the post-communist transition in Poland," Economics of Education Review, Elsevier, vol. 32(C), pages 78-91.
    5. Sarah Brown & John G. Sessions, 2004. "Signalling and Screening," Chapters,in: International Handbook on the Economics of Education, chapter 2 Edward Elgar Publishing.
    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. Arabsheibani, Gholamreza, 1989. "The wiles test revisited," Economics Letters, Elsevier, vol. 29(4), pages 361-364.
    8. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
    9. Riley, John G, 1979. "Testing the Educational Screening Hypothesis," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 227-252, October.
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    13. repec:spr:italej:v:3:y:2017:i:1:d:10.1007_s40797-016-0044-9 is not listed on IDEAS
    14. Sherwin Rosen, 1972. "Learning and Experience in the Labor Market," Journal of Human Resources, University of Wisconsin Press, vol. 7(3), pages 326-342.
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    17. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, Oxford University Press, vol. 87(3), pages 355-374.
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    More about this item

    Keywords

    education; skills; signalling; job matching; wages; Heckman correction;

    JEL classification:

    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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