Abstract
We test for the signaling hypothesis versus the human capital theory using the Wiles test in a country which has experienced a dramatic increase in the supply of skills in a relatively short period of time. For this purpose, we construct a job match index based on the usefulness of school-provided skills and the relevance of the job performed to the field of study. Then, we regress the first earnings of graduates on this index using OLS. The data we use come from a representative tracer survey of Poles who left secondary schools or graduated from higher education institutions over the period of 1998–2005. We find that only the graduates from higher education institutions obtain a wage premium from skills acquired in the course of formal education. This finding is robust to a number of robustness checks with different indicators of educational mismatch and instrumental variables.
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Source Authors’ own analyses based on data from the Polish LFS
Source Authors’ own analyses based on unit data from the Graduate Tracer Study
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Notes
Wincenciak (2016) computed the dominant level of education for each 3-digit level (ISCO 08) occupation group and assumed that respondents with higher than the dominant level of education are overeducated, while those with a lower level of education than the dominant one are undereducated.
At the same time, the fraction of individuals with basic vocational education decreased from 42 to 13% (author’s analyses based on data from the Polish labor force survey (LFS), 1995–2015). For a description of the Polish education system, see: Eurydice (2006).
Zhu and Zhu (2011) focus on one type of post-secondary diploma.
The survey was conducted as part of the project commissioned by the Polish Ministry of Labour entitled: “The analysis of labour market activity of graduates in the context of the implementation of The First Job Program.” The aims of the project were to assess the effects of the nationwide active labour market program “The First Job” addressed to the secondary school leavers and graduates of higher education institutions and to identify the factors causing their unemployment.
A description of the system of education in Poland can be found in Eurydice (2006).
For the sake of comparability of the initial earnings of graduates who started their first job in different years (1998–2005), initial hourly rates were adjusted by the Consumer Price Index, with 2005 as the base year.
The authors gratefully acknowledge the suggestion of one of the anonymous referees of the Journal to run separate estimates.
The results are available from the authors on request.
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Acknowledgements
This paper has been presented on several occasions: XXVI Meeting of the Economics of Education Association (29–30.06.2017, Murcia, Spain); XII Jornadas de Economia Laboral (06–07.07.2017, Valladolid, Spain). We thank all seminar participants for useful comments and in particular: Margarida Rodrigues, Geraint Johnes and Antonio Di Paolo. We thank two anonymous referees for very insightful comments. Nonetheless, the usual disclaimer applies.
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Liwiński, J., Pastore, F. Are School-Provided Skills Useful at Work? Results of the Wiles Test. Res High Educ 62, 72–97 (2021). https://doi.org/10.1007/s11162-019-09569-5
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DOI: https://doi.org/10.1007/s11162-019-09569-5