NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Educational Screening and Occupational Earnings

Edward N. Wolff, Joel Hay

NBER Working Paper No. 174
Issued in April 1977

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.

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Document Object Identifier (DOI): 10.3386/w0174

 
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