Signaling and Employer Learning with Instruments

Gaurab Aryal (), Manudeep Bhuller and Fabian Lange

American Economic Review, 2022, vol. 112, issue 5, 1669-1702

Abstract: This paper considers the use of instruments to identify and estimate private and social returns to education within a model of employer learning. What an instrument identifies depends on whether it is hidden from, or transparent (i.e., observed) to, the employers. A hidden instrument identifies private returns to education, and a transparent instrument identifies social returns to education. We use variation in compulsory schooling laws across noncentral and central municipalities in Norway to, respectively, construct hidden and transparent instruments. We estimate a private return of 7.9 percent, of which 70 percent is due to increased productivity and the remaining 30 percent is due to signaling.

JEL-codes: D82 H75 I26 I28 J24 J31 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (20)

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Related works:
Working Paper: Signaling and Employer Learning with Instruments (2021)
Working Paper: Signaling and Employer Learning with Instruments (2020)
Working Paper: Signaling and Employer Learning with Instruments (2020)
Working Paper: Signaling and Employer Learning with Instruments (2019)
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DOI: 10.1257/aer.20200146

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