Using Employer Hiring Behavior to Test the Educational Signaling Hypothesis

Abstract

This paper presents a test of the educational signaling hypothesis. If employers use education as a signal in the hiring process, they will rely more on education when less is otherwise known about applicants. We find that employers are more likely to lower educational standards when an informal, more informative recruitment channel is used, so we conclude that education is used as a signal in the hiring process.

Keywords: Recruitment, Signaling

JEL Classification: I20