Signaling and Education

Tyler Cowen:

p>Pursuing this topic, here are some of the good or interesting papers I discovered:

This UK piece reframes the David Card IV literature in terms of signaling and with UK data estimates that signaling accounts for one-third of the educational wage premium. It uses a “compulsory” instrumental variable from earlier UK schooling reforms.

Here is the Hanming Fang paper (IER): “…productivity enhancement accounts for close to two-thirds of the college wage
premium.” It uses very different techniques, based on simulations, not IV and the like.

This paper shows that rank measure in class doesn’t affect earnings, contrary to what signaling theories should predict. This may be a puzzle for learning theories as well.