Educational Screening and Occupational Earnings

29 Pages Posted: 12 Apr 2004 Last revised: 25 Dec 2022

See all articles by Edward N. Wolff

Edward N. Wolff

New York University (NYU) - Department of Economics; National Bureau of Economic Research (NBER); Bard College - Levy Economics Institute

Joel Hay

Independent

Date Written: April 1977

Abstract

The educational screening hypothesis states that beyond a certain point schooling functions as a signaling device to identify pre-existing talents. We test for the presence of screening by comparing the schooling and earnings of self-employed workers and of those employed by others in a sample set of occupations. We expect those employed by others to pursue additional schooling to signal prospective employers. We expect self-employed managers to acquire no additional schooling for signaling purposes. We expect other self-employed workers to obtain additional schooling to signal potential customers. Our empirical results, based on 1970 Census data, strongly support the case for screening. However, the relative magnitude of the screening portion of schooling is relatively modest, lying between approximately 5 and 10 percent.

Suggested Citation

Wolff, Edward N. and Hay, Joel, Educational Screening and Occupational Earnings (April 1977). NBER Working Paper No. w0174, Available at SSRN: https://ssrn.com/abstract=260363

Edward N. Wolff (Contact Author)

New York University (NYU) - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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Bard College - Levy Economics Institute

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Joel Hay

Independent

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