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Signalling or Human Capital: Evidence from the Finnish Polytechnic School Reform

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  • Ulla Hämäläinen
  • Roope Uusitalo

Abstract

We use data from the Finnish polytechnic reform to distinguish between human capital and signalling theories of the value of education. We find that the reform increased the earnings of polytechnic graduates compared with those graduating from the same schools before the reform, as predicted by both the human capital and the signalling models. However, we also find that the relative earnings of vocational college graduates decrease after polytechnic graduates start entering the labour market. This finding is inconsistent with the pure human capital model and can be interpreted as evidence that supports the signalling model.

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  • Ulla Hämäläinen & Roope Uusitalo, 2008. "Signalling or Human Capital: Evidence from the Finnish Polytechnic School Reform," Scandinavian Journal of Economics, Wiley Blackwell, vol. 110(4), pages 755-775, December.
    • Handle: RePEc:bla:scandj:v:110:y:2008:i:4:p:755-775
    DOI: 10.1111/j.1467-9442.2008.00560.x
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    Cited by:

    1. Böckerman, Petri & Haapanen, Mika, 2010. "The effect of education on migration: Evidence from school reform," MPRA Paper 27629, University Library of Munich, Germany.
    2. Petri Böckerman & Mika Haapanen, 2013. "The effect of polytechnic reform on migration," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(2), pages 593-617, April.
    3. Celeste K. Carruthers & Christopher Jepsen, 2020. "Vocational Education: An International Perspective," CESifo Working Paper Series 8718, CESifo.
    4. Annika C. Froehlich, 2016. "Does the curricular structure affect doctoral enrolment?," Journal of Business Economics, Springer, vol. 86(9), pages 1067-1089, December.
    5. Katharina Best & Jussi Keppo, 2014. "The credits that count: how credit growth and financial aid affect college tuition and fees," Education Economics, Taylor & Francis Journals, vol. 22(6), pages 589-613, December.
    6. Verena Dill & Anke Hammen, 2011. "Einkommensdifferenziale zwischen Bachelor- und Diplomabsolventen - Humankapital oder Signal?," Research Papers in Economics 2011-04, University of Trier, Department of Economics.
    7. Oppedisano, Veruska, 2014. "Higher education expansion and unskilled labour market outcomes," Economics of Education Review, Elsevier, vol. 40(C), pages 205-220.
    8. CARRIERI, Vincenzo & D'AMATO, Marcello & ZOTTI, Roberto, 2013. "Selective Admission Tests and Students' Performances. Evidence from a Natural Experiment in a Large Italian University," CELPE Working Papers 0/00, CELPE - Centre of Labour Economics and Economic Policy, University of Salerno, Italy.
    9. Mika Haapanen & Petri Böckerman, 2017. "More educated, more mobile? Evidence from post-secondary education reform," Spatial Economic Analysis, Taylor & Francis Journals, vol. 12(1), pages 8-26, January.
    10. Yuki, Kazuhiro, 2009. "Education, Signaling, and Wage Inequality in a Dynamic Economy," MPRA Paper 16982, University Library of Munich, Germany.
    11. Böckerman, Petri & Haapanen, Mika & Jepsen, Christopher, 2015. "Back to School? Labor-Market Returns to Vocational Postsecondary Education," IZA Discussion Papers 9079, Institute of Labor Economics (IZA).

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