More detail on the pattern of returns to educational signals

Stoffen Habermalz*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

8 Scopus citations

Abstract

This paper develops a multiperiod model in which workers are matched with jobs according to imperfect educational signals, and their subsequent productivities depend on both their inherent ability and on the quality of the job match. The model outlines a sequential process in which underpaid employees reveal their true productivities and overpaid employees are detected by the firm until every match is perfect. The model produces increasing returns to above median educational signals early in a worker's career - a new feature that earlier models did not capture. Estimates using data from the Current Population Survey are consistent with the theoretical result and are suggestive of a concave time pattern for the returns to educational signals.

Original languageEnglish (US)
Pages (from-to)125-135
Number of pages11
JournalSouthern Economic Journal
Volume73
Issue number1
DOIs
StatePublished - Jul 2006

ASJC Scopus subject areas

  • Economics and Econometrics

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