Does Education Raise Productivity, or Just Reflect it?

Arnaud Chevalier, Colm Harmon, Ian Walker () and Yu Zhu

Economic Journal, 2004, vol. 114, issue 499, F499-F517

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. Copyright 2004 Royal Economic Society.

Date: 2004
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Related works:
Working Paper: Does Education Raise Productivity or Just Reflect It? (2003)
Working Paper: Does education raise productivity, or just reflect it? (2003)
Working Paper: Does education raise productivity, or just reflect it? (2002)
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