Kjelland, Jim

Seeborg, Faculty Advisor, Michael

Digital Commons @ Illinois Wesleyan University

Illinois Wesleyan UniversityDigital Commons @ IWUJohn Wesley Powell Student ResearchConference 2008, 19th Annual JWP ConferenceApr 12th, 10:00 AM - 11:00 AMEconomic Returns to Higher Education: SignalingV. Human Capital TheoryJim KjellandIllinois Wesleyan UniversityMichael Seeborg, Faculty AdvisorIllinois Wesleyan UniversityFollow this and additional works at: http://digitalcommons.iwu.edu/jwprcThis Event is brought to you for free and open access by The Ames Library, the Andrew W. Mellon Center for Curricular and FacultyDevelopment, the Office of the Provost and the Office of the President. It has been accepted for inclusion in Digital Commons @ IWU bythe faculty at Illinois Wesleyan University. For more information, please contact digitalcommons@iwu.edu.©Copyright is owned by the author of this document.Jim Kjelland and Michael Seeborg, Faculty Advisor, "Economic Returns to Higher Education: Signaling V. Human CapitalTheory" (April 12, 2008). John Wesley Powell Student Research Conference. Paper 2.http://digitalcommons.iwu.edu/jwprc/2008/oralpres/2THE JOHN WESLEY POWELL STUDENT RESEARCH CONFERENCE - APRIL 2008 Oral Presentation 01 .2 ECONOMIC RETURNS TO mGHER EDUCATION: SIGNALING V. HUMAN CAPITAL THEORY Jim KjeUand and Michael Seeborg* Economics Department, Illinois Wesleyan University It is general knowledge that individuals with higher levels of education will, on average, earn higher wages in the labor market. And while this correlation has be established, the causal relationship behind those returns to education is less clear. Past research has been done in an attempt to determine the mechanism by which education increases earnings. Human Capital Theory argues intuitively that education endows an individual with productivity-enhancing human capital, which translates into higher wages in the labor market. Signaling Theory argues instead that education acts merely as a signal of inherent human capital, and that it is the inherent human capital, not acquired human capital, that determines a worker' s  wage. This study employs OLS regression and is an extension of a previous study carried out by Chevalier et al (2004). Using controls for inherent ability and motivation, it explores the effects of inherent human capital on productivity and wages, and applies that understanding to an assessment of the respective merits of both Signaling and Human Capital Theory. 

Economic Returns to Higher Education: Signaling V. Human Capital Theory

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Economic Returns to Higher Education: Signaling V. Human Capital Theory

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