Human capital theory suggests
that intereducational earnings differentials
reflect productivity-enhancing
effects of education, while the screening
hypothesis argues that they are
due to education functioning as a device
for signalling preexisting ability
differences. The implications of these
two hypotheses in terms of the
economic outcome of education are rather
contradictory. It is therefore
important to examine the extent to which
their predictions are consistent
with available data. This talk introduces
the screening hypothesis informally
and goes on to compare its predictions
with those of human capital theory.
After discussing the various empirical
approaches one could use to test
the screening hypothesis the results
obtained so far by PURE partners
are presented and related to the existing
empirical literature.
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