Beyond signaling and human capital: Education and the revelation of ability

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2010-10-01

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Abstract

We provide evidence that college graduation plays a direct role in revealing ability to the labor market. Using the NLSY79, our results suggest that ability is observed nearly perfectly for college graduates, but is revealed to the labor market more gradually for high school graduates. Consequently, from the beginning of their careers, college graduates are paid in accordance with their own ability, while the wages of high school graduates are initially unrelated to their own ability. This view of ability revelation in the labor market has considerable power in explaining racial differences in wages, education, and returns to ability.

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10.1257/app.2.4.76

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Arcidiacono, Peter, Patrick Bayer and Aurel Hizmo (2010). Beyond signaling and human capital: Education and the revelation of ability. American Economic Journal: Applied Economics, 2(4). pp. 76–104. 10.1257/app.2.4.76 Retrieved from https://hdl.handle.net/10161/4417.

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Scholars@Duke

Arcidiacono

Peter S. Arcidiacono

William Henry Glasson Distinguished Professor of Economics

Professor Arcidiacono specializes in research involving applied microeconomics, applied economics, and labor economics. His research primarily focuses on education and discrimination. His work focuses specifically on the exploration of a variety of subjects, such as structural estimation, affirmative action, minimum wages, teen sex, discrimination, higher education, and dynamic discrete choice models, among others. He recently received funding from a National Science Foundation Grant for his project, “CCP Estimation of Dynamic Discrete Choice Models with Unobserved Heterogeneity.” He has also been awarded grants from NICHD for his work entitled, “A Dynamic Model of Teen Sex, Abortion, and Childbearing;” and from the Smith Richardson Foundation for his study, “Does the River Spill Over? Race and Peer Effects in the College & Beyond” with Jacob Vigdor. Other recent studies of his include, “The Distributional Effects of Minimum Wage Increases when Both Labor Supply and Labor Demand are Endogenous” with Tom Ahm and Walter Wessles; “Explaining Cross-racial Differences in Teenage Labor Force Participation: Results from a General Equilibrium Search Model” with Alvin Murphy and Omari Swinton; and “The Effects of Gender Interactions in the Lab and in the Field” in collaboration with Kate Antonovics and Randy Walsh.

Bayer

Patrick Bayer

Gilhuly Family Distinguished Professor in Economics

Bayer's research focuses on wide range of subjects including racial inequality and segregation, social interactions, housing markets, education, and criminal justice. His most recent work has been published in the Quarterly Journal of Economics, American Economic Review, Econometrica, and the Review of Financial Studies. He is currently working on projects that examine jury representation and its consequences, the intergenerational consequences of residential and school segregation, neighborhood tipping, gentrification, the effect of police and criminal justice interactions on families, and the impact of bail reform.


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