Education and signaling : evidence from a highly competitive labor market
This paper directly tests for differences in returns to education between the employed and self-employed in Hong Kong. Using a step-function, we find significantly smaller returns for the self-employed, suggesting that in the highly competitive labor market of Hong Kong education plays a signaling role. This pattern persists for both genders, when accounting for self-selection into employment status and when accounting for self-employed professionals who signal.
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Heywood, J. S., & Wei, X. (2004). Education and signaling: Evidence from a highly competitive labor market. Education Economics, 12(1), 1-16. doi: 10.1080/0964529042000193925