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Does education raise productivity, or just reflect it?
Author(s)
Date Issued
2003-01
Date Available
2009-03-06T15:00:18Z
Abstract
It is clear that education has an important effect on wages paid in the labour market
However it not clear whether this is due to the role that education plays in raising the
productivity of workers (the human capital explanation) or whether education simply reflects the ability of the worker (through a signalling role). In this paper we describe and implement, using a variety of UK datasets, a number of tests from the existing literature for discriminating
between the two explanations. We find little support for signalling ideas in these tests. However, we have severe reservations about these results because our doubts about the power of these tests and the appropriateness of the data. We propose an alternative test, based on the response of some individuals to a change in education incentives offered to other individuals caused by the changes in the minimum school leaving age in the seventies.
Using this idea we find that data in the UK appears to strongly support the human capital explanation.
Type of Material
Working Paper
Publisher
University College Dublin. School of Economics
Series
UCD Centre for Economic Research Working Paper Series
WP03/04
Copyright (Published Version)
UCD School of Economics 2003
Keywords
Classification
I20
J30
Subject – LCSH
Labor productivity--Effect of education on
Education--Economic aspects
Wages--Effect of education on
Language
English
Status of Item
Not peer reviewed
This item is made available under a Creative Commons License
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