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Diploma as signal? Estimating sheepskin effects in the Philippines

Rosechin Olfindo

International Journal of Educational Development, 2018, vol. 60, issue C, 113-119

Abstract: The screening theory of education argues that education does not necessarily enhance worker’s productivity, but serves only as a signal of worker’s pre-existing ability. Empirical studies found that the mere possession of a diploma increases wages disproportionately than without it, or the so-called sheepskin effects. Using a sample of urban non-agricultural wage workers in the Philippines, this paper finds substantial sheepskin effects for holding a tertiary diploma, even after controlling for individual heterogeneity. While returns to tertiary education are lower in the competitive (private) sector, there is evidence of diverging age-earnings profiles between tertiary and secondary graduates, indicating a productive value higher education.

Keywords: Sheepskin effects; Returns to education; Higher education; Secondary education; Diploma effects; Developing country; Philippines (search for similar items in EconPapers)
Date: 2018
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