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Human Capital Versus Signaling Models: University Access and High School Drop-outs

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Kelly Bedard (UC - Santa Barbara)

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Abstract

Under the educational sorting hypothesis, an environment in which some individuals are constrained from entering university will be characterized by increased pooling at the high school graduation level, as compared to an environment with greater university access.This results because some potential high school drop-outs and university enrollees choose the high school graduate designation in order to take advantage of high ability individuals who are constrained from entering university.This is in stark contrast to human capital theory which predicts higher university enrollment, but identical high school drop-out rates in regions with greater university access. I test the contradictory high school drop-out predictions of the human capital and signaling models using NLSYM and NLSYW education data from the late 1960s and early 1970s. I find that labor markets that contain universities have higher high school drop-out rates. This result is consistent with a signaling model, and inconsistent with a pure human capital model.

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Paper provided by Claremont Colleges in its series Claremont Colleges Working Papers with number 1999-01.

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Handle: RePEc:clm:clmeco:1999-01

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Keywords: education; human capital; sorting models;

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Find related papers by JEL classification:
I2 - Health, Education, and Welfare - - Education
C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models

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  1. Lang, Kevin & Kropp, David, 1986. "Human Capital versus Sorting: The Effects of Compulsory Attendance Laws," The Quarterly Journal of Economics, MIT Press, vol. 101(3), pages 609-24, August. [Downloadable!] (restricted)
  2. David Card, 1993. "Using Geographic Variation in College Proximity to Estimate the Return to Schooling," NBER Working Papers 4483, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  3. Spence, A Michael, 1973. "Job Market Signaling," The Quarterly Journal of Economics, MIT Press, vol. 87(3), pages 355-74, August. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Muller, W. & Kubler, D. & Normann, H.T., 2003. "Job market signaling and screening: an experimental comparison," Discussion Paper 124, Tilburg University, Center for Economic Research. [Downloadable!]
    Other versions:
  2. Robert Dur, 2006. "Status-Seeking in Violent Subcultures and the Double Dividend of Zero-Tolerance," Tinbergen Institute Discussion Papers 06-005/1, Tinbergen Institute. [Downloadable!]
  3. Tali Regev, 2007. "Imperfect information, self-selection and the market for higher education," Working Paper Series 2007-18, Federal Reserve Bank of San Francisco. [Downloadable!]
  4. Arnaud Chevalier & Colm Harmon & Ian Walker & Yu Zhu, 2003. "Does education raise productivity, or just reflect it?," Working Papers 200304, School Of Economics, University College Dublin. [Downloadable!]
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  5. Paul Willen & Igal Hendel & Joel Shapiro, 2004. "Educational Opportunity and Income Inequality," NBER Working Papers 10879, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  6. Strobl, Eric, 2003. "Is Education Used as a Signaling Device for Productivity in Developing Countries? Evidence from Ghana," IZA Discussion Papers 683, Institute for the Study of Labor (IZA). [Downloadable!]
  7. Marc Gurgand & Eric Maurin, 2007. "A large scale experiment: wages and educational expansion in France," PSE Working Papers 2007-21, PSE (Ecole normale supérieure). [Downloadable!]
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  8. Bergh, Andreas & Fink, Günther, 2005. "Escaping Mass Education – Why Harvard Pays," Working Papers 2005:2, Lund University, Department of Economics. [Downloadable!]
  9. David A. Green, 2007. "A Cautionary Discussion about Relying on Human Capital Policy to Meet Redistributive Goals," Canadian Public Policy, University of Toronto Press, vol. 33(4), pages 397-418, December. [Downloadable!] (restricted)
  10. Joan Esteban & Debraj Ray, 2006. "Inequality, Lobbying, and Resource Allocation," American Economic Review, American Economic Association, vol. 96(1), pages 257-279, March. [Downloadable!]
  11. Lari Arthur Viianto, 2007. "On The Positive Effects Of Taxation On Education," Working Papers. Serie AD 2007-30, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie). [Downloadable!]
  12. Habermalz, Steffen, 2003. "Job Matching and the Returns to Educational Signals," IZA Discussion Papers 726, Institute for the Study of Labor (IZA). [Downloadable!]
  13. Robert Dur, 2006. "Status-Seeking in Criminal Subcultures and the Double Dividend of Zero-Tolerance," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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