Signaling and Employer Learning with Instruments

75 Pages Posted: 29 May 2019 Last revised: 25 Mar 2023

See all articles by Gaurab Aryal

Gaurab Aryal

Washington University in St. Louis

Manudeep Bhuller

University of Oslo - Department of Economics; Statistics Norway

Fabian Lange

McGill University

Multiple version iconThere are 4 versions of this paper

Date Written: May 2019

Abstract

This paper considers the use of instruments to identify and estimate private and social returns to education within a model of employer learning. What an instrument identifies depends on whether it is hidden from, or transparent (i.e., observed) to, the employers. A hidden instrument identifies private returns to education, and a transparent instrument identifies social returns to education. We use variation in compulsory schooling laws across non-central and central municipalities in Norway to construct hidden and transparent instruments. We estimate a private return of 7.9%, of which 70% is due to increased productivity and the remaining 30% is due to signaling.

Suggested Citation

Aryal, Gaurab and Bhuller, Manudeep and Lange, Fabian, Signaling and Employer Learning with Instruments (May 2019). NBER Working Paper No. w25885, Available at SSRN: https://ssrn.com/abstract=3395644

Gaurab Aryal (Contact Author)

Washington University in St. Louis ( email )

Seigle Hall 335
One Brookings Drive
St. Louis, MO 63130
United States

Manudeep Bhuller

University of Oslo - Department of Economics ( email )

P.O. Box 1095 Blindern
N-0317 Oslo
Norway

HOME PAGE: http://sites.google.com/site/manudeepbhuller

Statistics Norway ( email )

N-0033 Oslo
Norway

HOME PAGE: http://sites.google.com/site/manudeepbhuller

Fabian Lange

McGill University ( email )

1001 Sherbrooke St. W
Montreal, Quebec H3A 1G5
Canada

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