Does education raise productivity, or just reflect it?

Arnaud Chevalier, Colm Harmon, Ian Walker, Yu Zhu

    Research output: Contribution to journalArticle

    79 Citations (Scopus)

    Abstract

    Education has an important effect on wages but it not clear whether this is because education raises productivity or because education is simply a signal of ability. We implement a number of existing tests for discriminating between these two explanations and find that they do not support the signalling hypothesis. However, we have severe reservations about these results and we propose an alternative test based on changes in education incentives caused by changes in the minimum school leaving age in the 1970s. Using this idea we find that UK data appear to strongly support the human capital explanation.

    Original languageEnglish
    Article number1753
    Pages (from-to)F499-F517
    Number of pages19
    JournalEconomic Journal
    Volume114
    Issue number499
    DOIs
    Publication statusPublished - 18 Oct 2004

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