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Title: Essays on Education, Selection and Wage Dynamics

Citation Type: Dissertation/Thesis

Publication Year: 2008

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Abstract: The dissertation is concerned with the empirical relationship between educational attainment and earnings. Workers with higher education on average have higher wages, however the di erence in earnings can not be entirely attributed to education if workers with higher education also have inherent productive qualities that are not directly observable. The second chapter of the dissertation is an attempt to provide an empirical measure of the contribution of education to a worker's productivity. The estimates suggest that the return to education is about 60% of the observed di erence in earnings.The third chapter further investigates the relative signi cance of two theories that each provide an explanation for the empirical relationships between education, ability and earnings: the human capital theory and the job market signaling theory. It is important to distinguish between these theories since the signaling theory argues that the private return to education (to a worker) is higher than the social return (to the economy), generating potential welfare losses. We develop a hybrid model of educational choice under asymmetric information and provide a quantitative evaluation of the signaling role of education. The results suggest that the return to signaling is signi cant for the low skilled workers constituting about a quarter of the observed di erences in earnings due to education. The fourth chapter concentrates on the earnings growth over the life-cycleand discusses the role of the human capital model in explaining the empirical patterns in the data. In particular, the workers with lower educational attainment experience a slower earnings growth conditional on ability. This empirical fact has been regarded as evidence for the presence of asymmetric information among young workers and employers. We show that a model of life-cycle human capital accumulation is also consistent with this observation if training investment on the job and education are substitutes in the production of human capital. A quantitative evaluation of the model shows that the training investments observed in the data are not signi cant enough for these empirical patterns to be explained by the human capital theory alone.

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Authors: Kaymak, Baris

Institution: University of Rochester

Department: Department of Economics

Advisor: Prof. Mark Bils

Degree: Doctor of Philosophy

Publisher Location: University of Rochester

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Data Collections: IPUMS CPS

Topics: Education, Labor Force and Occupational Structure

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