What is it About Schooling That the Labor Market Rewards? The Components of the Return to Schooling

Cyril Pasche ()

No 29, Economics of Education Working Paper Series from University of Zurich, Department of Business Administration (IBW)

Abstract: Research on determining what it is about schooling that the labor market rewards is scarce. This paper shows that when specifically controlling for schooling cognitive skills (i.e. the capacity to process information and apply knowledge) and not cognitive skills as a whole, a considerable share of the return to schooling is constituted of cognitive skills. This contrasts with previous research that strongly favored noncognitive skills (i.e. behavioral and personality traits) as the key component of the return to schooling. Results show schools are a place where one acquires, or is sorted, on a knowledge and a behavioral criteria in similar shares. Findings also suggest that cognitive skills acquired in school are considerably more likely to be rewarded than their non-schooling counterpart. This effect may be attributed to the signaling value of schooling. Such conclusions give weight to current policies that employ cognitive skill tests to asses schooling quality.

Keywords: Schooling; Cognitive and noncognitive skills; Wages; Rate of return; Omitted variable bias; Signaling (search for similar items in EconPapers)
JEL-codes: I21 J24 J31 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2008-06
New Economics Papers: this item is included in nep-edu, nep-hrm and nep-lab
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Persistent link: https://EconPapers.repec.org/RePEc:iso:educat:0029

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