Returns to Education through Access to Higher-Paying Firms: Evidence from US Matched Employer-Employee Data

摘要

Higher education degrees command large pay premiums in the US labor market, yet their origins remain elusive. We link this debate back to whether higher education increases human capital or acts as a signal in the labor market. The quantitative relevance of these two hypotheses is central to the efficiency of education and labor market policies as well as macroeconomic considerations. We contribute to this fundamental area by studying the extent to which higher education degrees facilitate sorting toward high wage firms. To this end, we combine matched employer-employee data together with detailed higher education information from the US state of Ohio.