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Does Education Signal Ability In Ghana? An Analysis Comparing Wage Earners With The Self-Employed, Sara Gundersen
Does Education Signal Ability In Ghana? An Analysis Comparing Wage Earners With The Self-Employed, Sara Gundersen
Sara Gundersen
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 …