Article
Does Education Signal Ability in Ghana? An Analysis Comparing Wage Earners with the Self-Employed
International Journal of Education Economics and Development
(2015)
Abstract
When education signals underlying abilities, income returns to education may not reflect true increases in productivity. This may be a particular concern in developing countries, where education is often prescribed as a major path to escaping poverty. Unfortunately, because education signaling occurs when underlying worker characteristics are difficult to observe, obtaining estimates of education signaling is extremely difficult. This paper uses Spence’s 2002 model of signaling to develop a testable hypothesis: in the presence of education signaling, wage earners will see a higher return to education than the self-employed doing similar work. Using the 2005-2006 round of the Ghana Living Standards Survey, the study finds that returns to education are consistently higher for those in the wage-earning sector, which supports an education signaling hypothesis. Signaling appears to be more prevalent at higher levels of education and in large, unionized, and professional firms.
Keywords
- Education Signaling,
- Returns to Education,
- Developing Nations,
- Ghana,
- Self-employment
Disciplines
Publication Date
2015
Citation Information
Sara Gundersen. "Does Education Signal Ability in Ghana? An Analysis Comparing Wage Earners with the Self-Employed" International Journal of Education Economics and Development (2015) Available at: http://works.bepress.com/sara-gundersen/1/