You are here:

What Do Educational Credentials Signal and Why Do Employers Value Credentials?
ARTICLE

Economics of Education Review Volume 18, Number 1 ISSN 0272-7757 Publisher: Elsevier Ltd

Abstract

This paper examines whether employers can infer information about workers' pre-college abilities from the college credentials they acquire and whether employers value the attainment of credentials because credentials signal these abilities. I find that a high school diploma, college attendance, a bachelor's degree and a graduate degree signal higher pre-college abilities that are reflected in scores from tests administered to respondents in the NLSY. However, an associate's degree does not. Estimating a sorting model of wage determination, the results indicate that employers do value the attainment of a bachelor's degree in part because it signals these pre-college abilities. The coefficient estimates on an associate's degree and a bachelor's degree remain statistically significant after controlling for ability. This indicates that these degrees mark other attributes that employers find worthwhile, perhaps unobserved ability such as motivation and perseverance. [JEL J31]

Citation

Arkes, J. What Do Educational Credentials Signal and Why Do Employers Value Credentials?. Economics of Education Review, 18(1), 133-141. Elsevier Ltd. Retrieved March 26, 2023 from .

This record was imported from Economics of Education Review on March 1, 2019. Economics of Education Review is a publication of Elsevier.

Full text is availabe on Science Direct: http://dx.doi.org/10.1016/S0272-7757(98)00024-7

Keywords

References

View References & Citations Map
  1. Belman, D., & Heywood, J. (1991). Sheepskin effects in the returns to education: an examination of women and minorities . The Review of Economics and Statistics, 73(4), pp. 720-724.
  2. Bishop, J. (1992). The impact of academic competencies on wages, unemployment, and job performance . Carnegie–Rochester Conference Series on Public Policy, 37, pp. 127-194.
  3. Chiswick, B. (1973) Schooling, screening, and income. In Does College Matter? (Edited by Lewis Solomon and Paul Taubman), pp. 151–158. New York: Academic Press.
  4. Frazis, H. (1993). Selection bias and the degree effect . The Journal of Human Resources, 28(3), pp. 538-554.
  5. Grubb, W.N. (1993). The varied economic returns to postsecondary education: new evidence from the class of 1972 . The Journal of Human Resources, 37(2), pp. 365-382.
  6. Heywood, J. (1994). How widespread are sheepskin returns to education in the U.S.? . Economics of Education Review, 13(3), pp. 227-234.
  7. Hungerford, T., & Solon, G. (1987). Sheepskin effects in the returns to education . The Review of Economics and Statistics, 69(1), pp. 175-178.
  8. Kane, T., & Rouse, C. (1995). Labor market returns to two- and four-year college . American Economic Review, 85(3), pp. 600-614.
  9. Neal, D. and Johnson W. (1994) The role of pre-market factors in black–white wage differences. Working paper presented at Univ. of Wisconsin.
  10. Spence, M. (1974) Market Signaling: Informational Transfer in Hiring and Related Screening Processes. Cambridge, MA: Harvard University Press.
  11. Weiss, A. (1995). Human capital vs signaling explanations of wages . Journal of Economic Perspectives, 9(4), pp. 134-155.

These references have been extracted automatically and may have some errors. Signed in users can suggest corrections to these mistakes.

Suggest Corrections to References