IDEAS home Printed from https://ideas.repec.org/p/sek/iefpro/4507121.html
   My bibliography  Save this paper

Are school-provided skills useful at work? Results of the Wiles test

Author

Listed:
  • Jacek Liwinski

    (University of Warsaw)

Abstract

Although it has been over 40 years since labour economists started testing human capital vs. signalling explanation of the wage premium from education, the debate is still going on and authors keep on proposing new methods of testing. The human capital theory postulates that investment in education enhances the productive capacity of individuals, while according to the signalling hypothesis the value of a graduation diploma follows from the fact that it signals innate abilities of its holder. We apply the approach proposed by Wiles to test for the signalling hypothesis and, in particular, to find out if there is a positive relation between education and productivity. For this purpose, we construct a job match index based on information if school provided knowledge and skills are useful at work and the job performed is relevant to the field of study. Then we check if the quality of job matching is related to wages of graduates in Poland. To answer this question, a wage equation was estimated using OLS on the basis of data from a representative, nationwide tracer survey of Poles who left secondary schools or graduated from higher education institutions over the period of 1998-2005. We find out that knowledge and skills acquired in the course of formal education bring wage benefits only to university graduates. Besides, this group receives a wage premium, which may be attributed to their high innate abilities. In sum, the outcomes are consistent with the weak signalling hypothesis, since they show that tertiary education signals a high level of innate abilities and at the same time it provides knowledge and skills which enhance individual productivity at work. Besides, we find evidence of the strong signalling hypothesis with regard to the secondary vocational schools leavers.

Suggested Citation

  • Jacek Liwinski, 2017. "Are school-provided skills useful at work? Results of the Wiles test," Proceedings of Economics and Finance Conferences 4507121, International Institute of Social and Economic Sciences.
    • Handle: RePEc:sek:iefpro:4507121
    as

    Download full text from publisher

    File URL: https://iises.net/proceedings/7th-economics-finance-conference-tel-aviv-israel/table-of-content/detail?cid=45&iid=011&rid=7121
    File Function: First version, 2017
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Kiersztyn, Anna, 2013. "Stuck in a mismatch? The persistence of overeducation during twenty years of the post-communist transition in Poland," Economics of Education Review, Elsevier, vol. 32(C), pages 78-91.
    2. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863, Elsevier.
    3. Gary S. Becker, 1964. "Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education, First Edition," NBER Books, National Bureau of Economic Research, Inc, number beck-5.
    4. Floro Ernesto Caroleo & Francesco Pastore, 2012. "Overeducation at a glance. Determinants and wage effects of the educational mismatch, looking at the AlmaLaurea data," Discussion Papers 18_2012, CRISEI, University of Naples "Parthenope", Italy.
    5. Riley, John G, 1979. "Testing the Educational Screening Hypothesis," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 227-252, October.
    6. Miller, Paul W & Volker, Paul A, 1984. "The Screening Hypothesis: An Application of the Wiles Test," Economic Inquiry, Western Economic Association International, vol. 22(1), pages 121-127, January.
    7. Patrizia Ordine & Giuseppe Rose, 2017. "Individual Mismatch and Aggregate Overeducation: Evidence from a Quasi-Natural Experiment," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 3(1), pages 1-23, March.
    8. Maciej Jakubowski, 2015. "Opening up opportunities: education reforms in Poland," IBS Policy Papers 01/2015, Instytut Badan Strukturalnych.
    9. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    10. Arteaga, Carolina, 2018. "The effect of human capital on earnings: Evidence from a reform at Colombia's top university," Journal of Public Economics, Elsevier, vol. 157(C), pages 212-225.
    11. Leszek Wincenciak, 2016. "Educational mismatches and earnings: are the graduates more penalized for being overeducated?," Working Papers 2016-28, Faculty of Economic Sciences, University of Warsaw.
    12. Stiglitz, Joseph E, 1975. "The Theory of "Screening," Education, and the Distribution of Income," American Economic Review, American Economic Association, vol. 65(3), pages 283-300, June.
    13. Luca Flóra Drucker & Daniel Horn, 2016. "Decreased tracking, increased earning: Evidence from the comprehensive Polish educational reform of 1999," Budapest Working Papers on the Labour Market 1602, Institute of Economics, Centre for Economic and Regional Studies.
    14. Arrow, Kenneth J., 1973. "Higher education as a filter," Journal of Public Economics, Elsevier, vol. 2(3), pages 193-216, July.
    15. Sherwin Rosen, 1972. "Learning and Experience in the Labor Market," Journal of Human Resources, University of Wisconsin Press, vol. 7(3), pages 326-342.
    16. Floro Ernesto Caroleo & Francesco Pastore, 2018. "Overeducation at a Glance. Determinants and Wage Effects of the Educational Mismatch Based on AlmaLaurea Data," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 137(3), pages 999-1032, June.
    17. Moulton, Brent R, 1990. "An Illustration of a Pitfall in Estimating the Effects of Aggregate Variables on Micro Unit," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 334-338, May.
    18. Sarah Brown & John G. Sessions, 2004. "Signalling and Screening," Chapters, in: Geraint Johnes & Jill Johnes (ed.), International Handbook on the Economics of Education, chapter 2, Edward Elgar Publishing.
    19. Geraint Johnes & Jill Johnes (ed.), 2004. "International Handbook on the Economics of Education," Books, Edward Elgar Publishing, number 2847.
    20. Leszek Wincenciak, 2016. "Educational mismatches and earnings in Poland: are graduates penalised for being overeducated?," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 46.
    21. Damon Clark & Paco Martorell, 2014. "The Signaling Value of a High School Diploma," Journal of Political Economy, University of Chicago Press, vol. 122(2), pages 282-318.
    22. Brown, Sarah & Sessions, John G., 2006. "Evidence on the relationship between firm-based screening and the returns to education," Economics of Education Review, Elsevier, vol. 25(5), pages 498-509, October.
    23. Blaug, Mark, 1976. "The Empirical Status of Human Capital Theory: A Slightly Jaundiced Survey," Journal of Economic Literature, American Economic Association, vol. 14(3), pages 827-855, September.
    24. O. Ashenfelter & D. Card (ed.), 1999. "Handbook of Labor Economics," Handbook of Labor Economics, Elsevier, edition 1, volume 3, number 3.
    25. Arabsheibani, Gholamreza, 1989. "The wiles test revisited," Economics Letters, Elsevier, vol. 29(4), pages 361-364.
    26. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 87(3), pages 355-374.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Piróg Danuta & Hibszer Adam, 2023. "Which Skills are the Most Prized? Analysing Monetary Value of Geographers’ Skills on the Labour Market in Six European Countries," Quaestiones Geographicae, Sciendo, vol. 42(4), pages 63-79, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jacek Liwiński, 2019. "Does it pay to study abroad? Evidence from Poland," International Journal of Manpower, Emerald Group Publishing Limited, vol. 40(3), pages 525-555, February.
    2. Nick Huntington-Klein, 2021. "Human capital versus signaling is empirically unresolvable," Empirical Economics, Springer, vol. 60(5), pages 2499-2531, May.
    3. Piopiunik, Marc & Schwerdt, Guido & Simon, Lisa & Woessmann, Ludger, 2020. "Skills, signals, and employability: An experimental investigation," European Economic Review, Elsevier, vol. 123(C).
    4. repec:eee:labchp:v:1:y:1986:i:c:p:525-602 is not listed on IDEAS
    5. Gaurab Aryal & Manudeep Bhuller & Fabian Lange, 2022. "Signaling and Employer Learning with Instruments," American Economic Review, American Economic Association, vol. 112(5), pages 1669-1702, May.
    6. Brown, Sarah & Sessions, John G., 1999. "Education and employment status: a test of the strong screening hypothesis in Italy," Economics of Education Review, Elsevier, vol. 18(4), pages 397-404, October.
    7. Kristinn Hermannsson & Patrizio Lecca, 2016. "Human Capital in Economic Development: From Labour Productivity to Macroeconomic Impact," Economic Papers, The Economic Society of Australia, vol. 35(1), pages 24-36, March.
    8. Joaquin Turmo-Garuz & M.-Teresa Bartual-Figueras & Francisco-Javier Sierra-Martinez, 2019. "Factors Associated with Overeducation Among Recent Graduates During Labour Market Integration: The Case of Catalonia (Spain)," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 144(3), pages 1273-1301, August.
    9. Maria Esther Oswald-Egg & Ursula Renold, 2019. "No Experience, No Employment: The Effect of Vocational Education and Training Work Experience on Labour Market Outcomes after Higher Education," KOF Working papers 19-469, KOF Swiss Economic Institute, ETH Zurich.
    10. Harry Anthony Patrinos & Maria Paula Savanti, 2014. "The Screening Hypothesis and the Returns to Schooling in Argentina," Research in Applied Economics, Macrothink Institute, vol. 6(3), pages 28-42, September.
    11. Emilia Bedyk & Jacek Liwiński, 2016. "The wage premium from parents’ investments in the education of their children in Poland," Working Papers 2016-14, Faculty of Economic Sciences, University of Warsaw.
    12. Jacek Liwiński, 2017. "Premia płacowa z kształcenia na studiach podyplomowych," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 5, pages 105-127.
    13. Stanislav Avdeev, 2020. "Zero Returns To Higher Education: Evidence From A Natural Experiment," HSE Working papers WP BRP 236/EC/2020, National Research University Higher School of Economics.
    14. Polachek, Solomon W., 2008. "Earnings Over the Life Cycle: The Mincer Earnings Function and Its Applications," Foundations and Trends(R) in Microeconomics, now publishers, vol. 4(3), pages 165-272, April.
    15. Reuben Gronau, 2010. "Zvi Griliches' Contribution to the Theory of Human Capital," NBER Chapters, in: Contributions in Memory of Zvi Griliches, pages 275-297, National Bureau of Economic Research, Inc.
    16. Henry Renski, 2018. "Estimating the Returns to Professional Certifications and Licenses in the U.S. Manufacturing Sector," Economic Development Quarterly, , vol. 32(4), pages 341-356, November.
    17. Lisa Grazzini, 2016. "The Importance of the Quality of Education: Some Determinants and its Effects on Earning Returns and Economic Growth," ECONOMIA PUBBLICA, FrancoAngeli Editore, vol. 2016(2), pages 43-82.
    18. Fossen, Frank M. & Büttner, Tobias J.M., 2013. "The returns to education for opportunity entrepreneurs, necessity entrepreneurs, and paid employees," Economics of Education Review, Elsevier, vol. 37(C), pages 66-84.
    19. Wang, Jun & Li, Bo, 2020. "Does employer learning with statistical discrimination exist in China? Evidence from Chinese Micro Survey Data," International Review of Economics & Finance, Elsevier, vol. 69(C), pages 319-333.
    20. Lisa Simon, 2019. "Microeconometric Analyses on Determinants of Individual Labour Market Outcomes," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 83.
    21. Inmaculada Garc�a-Mainar & V�ctor M. Montuenga-G�mez, 2017. "Subjective educational mismatch and signalling in Spain," Documentos de Trabajo dt2017-03, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.

    More about this item

    Keywords

    education; human capital; signalling; job matching; wage equation;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sek:iefpro:4507121. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Klara Cermakova (email available below). General contact details of provider: https://iises.net/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.