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Sheepskin effects and the returns to education in New Zealand: Do they differ by ethnic groups?

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  • John Gibson

Abstract

Sheepskin effects are the wage returns specific to educational credentials rather than to accumulated years of education. They can occur because credentials may signal workers' productivity. Signalling high productivity may be more valuable for members of ethnic minority groups if employers practice statistical discrimination. Many studies estimate sheepskin effects indirectly, from non-linear wage returns to schooling years that correspond to the “usual” time taken to complete a qualification, but such methods are likely to be biased. This study directly estimates sheepskin effects in New Zealand using a special survey with information on both years of education and qualifications received. The results show large sheepskin effects, with the returns to credentials exceeding the returns to years of education, especially for ethnic minorities.

Suggested Citation

  • John Gibson, 2000. "Sheepskin effects and the returns to education in New Zealand: Do they differ by ethnic groups?," New Zealand Economic Papers, Taylor & Francis Journals, vol. 34(2), pages 201-220.
    • Handle: RePEc:taf:nzecpp:v:34:y:2000:i:2:p:201-220
    DOI: 10.1080/00779950009544323
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    Cited by:

    1. Gail Pacheco, 2012. "The cost of poor transitions for youth," Working Papers 2012-09, Auckland University of Technology, Department of Economics.
    2. John Gibson, 2003. "Do Lower Expected Wage Benefits Explain Ethnic Age Gaps in Job-Related Training? Evidence from New Zealand," Working Papers 03_03, Motu Economic and Public Policy Research.
    3. John Gibson & Trinh Le & Steven Stillman, 2007. "What explains the wealth gap between immigrants and the New Zealand born?," New Zealand Economic Papers, Taylor & Francis Journals, vol. 41(2), pages 131-162.
    4. Mora Rodríguez, Jhon James & Muro, Juan, 2015. "On the size of sheepskin effects: A meta-analysis," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 9, pages 1-18.
    5. Nick Huntington-Klein, 2021. "Human capital versus signaling is empirically unresolvable," Empirical Economics, Springer, vol. 60(5), pages 2499-2531, May.
    6. O’Mahony, Mary & Pastor, José Manuel & Peng, Fei & Serrano, Lorenzo & Hernández, Laura, 2012. "Output growth in the post‐compulsory education sector: the European experience," MPRA Paper 44016, University Library of Munich, Germany.
    7. Engelbrecht, Hans-Jurgen & Mahon, Anne, 2003. "Maori And The Information Workforce, 1991-2001," Discussion Papers 23697, Massey University, Department of Applied and International Economics.
    8. Jhon James Mora, 2003. "Sheepskin effects and screening in Colombia," Colombian Economic Journal, Universidad Nacional de Colombia, FCE, CID, April.
      • Jhon James Mora, 2003. "Sheepskin effects and screening in Colombia," Colombian Economic Journal, Academia Colombiana de Ciencias Economicas, Colegio Mayor de Nuestra Senora del Rosario, Pontificia Universidad Javeriana, Universidad de Antioquia, Universidad de los Andes, Universidad del Valle, Universidad Externado de Colombia, Universidad Nacional de Colombia, vol. 1(1), pages 95-108, December.
    9. David C. Maré, 2003. "Ideas for Growth?," Working Papers 03_19, Motu Economic and Public Policy Research.
    10. Lin Xiu & Morley Gunderson, 2013. "Credential Effects and the Returns to Education in China," LABOUR, CEIS, vol. 27(2), pages 225-248, June.
    11. John Gibson & Trinh Le & Grant Scobie, 2006. "Household Bargaining Over Wealth And The Adequacy Of Women'S Retirement Incomes In New Zealand," Feminist Economics, Taylor & Francis Journals, vol. 12(1-2), pages 221-246.
    12. Christer Thrane, 2010. "Education and Earnings in the Tourism Industry – the Role of Sheepskin Effects," Tourism Economics, , vol. 16(3), pages 549-563, September.
    13. Nicolas Hérault & Rezida Zakirova, 2011. "Sheepskin Effects in the Returns to Education: Accounting for Enrolment and Completion Effects," Melbourne Institute Working Paper Series wp2011n04, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    14. John Gibson, 2003. "Do Lower Expected Wage Benefits Explain Ethnic Gaps In Job- Related Training? Evidence From New Zealand," Labor and Demography 0310004, University Library of Munich, Germany.
    15. Nicolas H�rault & Rezida Zakirova, 2015. "Returns to education: accounting for enrolment and completion effects," Education Economics, Taylor & Francis Journals, vol. 23(1), pages 84-100, February.
    16. Sholeh A. Maani, 2004. "Why Have Maori Relative Income Levels Deteriorated Over Time?," The Economic Record, The Economic Society of Australia, vol. 80(248), pages 101-124, March.
    17. Veronica Jacobsen & Nicholas Mays & Ron Crawford & Barbara Annesley & Paul Christoffel & Grant Johnston & Sid Durbin, 2002. "Investing in Well-being: An Analytical Framework," Treasury Working Paper Series 02/23, New Zealand Treasury.
    18. Jessica Dye & Stephani� Rossouw & Gail Pacheco, 2012. "Well-being of women in New Zealand: The changing landscape," New Zealand Economic Papers, Taylor & Francis Journals, vol. 46(3), pages 273-302, December.
    19. Gail Pacheco & Jessica Dye, 2013. "Estimating the Cost of Youth Disengagement in New Zealand," Working Papers 2013-04, Auckland University of Technology, Department of Economics.
    20. Olfindo, Rosechin, 2018. "Diploma as signal? Estimating sheepskin effects in the Philippines," International Journal of Educational Development, Elsevier, vol. 60(C), pages 113-119.
    21. Habermalz, Steffen, 2003. "An Examination of Sheepskin Effects Over Time," IZA Discussion Papers 725, Institute of Labor Economics (IZA).

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