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Human Capital vs. Signalling Explanations of Wages

Human Capital vs. Signalling Explanations of Wages Abstract The key difference between signalling and human capital models is that signalling models allow firms to draw inferences about unobserved characteristics of workers. Those inferences can be based on the schooling or work experience of workers, or on direct measures of some aspects of job performance. Many recent empirical findings can be better explained by signalling models than by human capital theory. Given the explanatory power of signalling models, standard estimates of the social return to secondary schooling are in large part capturing differences in affective traits, such as perseverance, which were acquired either in primary school or at home. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Economic Perspectives American Economic Association

Human Capital vs. Signalling Explanations of Wages

Journal of Economic Perspectives , Volume 9 (4) – Nov 1, 1995

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Publisher
American Economic Association
Copyright
Copyright © 1995 by the American Economic Association
Subject
Articles
ISSN
0895-3309
DOI
10.1257/jep.9.4.133
Publisher site
See Article on Publisher Site

Abstract

Abstract The key difference between signalling and human capital models is that signalling models allow firms to draw inferences about unobserved characteristics of workers. Those inferences can be based on the schooling or work experience of workers, or on direct measures of some aspects of job performance. Many recent empirical findings can be better explained by signalling models than by human capital theory. Given the explanatory power of signalling models, standard estimates of the social return to secondary schooling are in large part capturing differences in affective traits, such as perseverance, which were acquired either in primary school or at home.

Journal

Journal of Economic PerspectivesAmerican Economic Association

Published: Nov 1, 1995

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