Higher Education Expansion and Education Choices of High- and Low-Skilled Workers: Theory and Experiment

Zedong Hao and Yun Wang
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Zedong Hao: Wuhan University

No 2019-07-11, Working Papers from Wang Yanan Institute for Studies in Economics (WISE), Xiamen University

Abstract: This paper explore a signaling model to investigate the impact the education expansion on workers’ wage and the cost of education. We propose a signal model with a continuous distribution of workers’ ability based on the work of Ge and Haller (2018). By implementing laboratory experiments, it gives consistent outcomes with the model’s expectation. The main findings are: 1) the enrollment expansion helps to alleviate workers’ competition for education opportunity and can decrease the overall education cost; 2) the policy may lower firms’ expectations for both educated and uneducated workers and drive the wage for both groups down in the labor market. Besides, the theoretical model also implies that the education expansion has ambiguous effect on the wage premium of education, and it depends on the feature of industry.

Keywords: Education Expansion; Education Signaling Model; Wage Premium; Experiments (search for similar items in EconPapers)
Date: 2019-07-11
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Persistent link: https://EconPapers.repec.org/RePEc:wyi:wpaper:002527

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