In traditional signaling models, education provides a way for individuals to sort themselves by ability. Employers in turn use education to statistically discriminate, paying wages that reflect the average productivity of workers with the same given level of education. In this paper, we provide evidence that education (specifically, attending…

A statistical analysis was performed to test the hypothesis that, if profit-maximizing firms have limited information about the general productivity of new workers, they may choose to use easily observable characteristics such as years of education to discriminate statistically among workers. Information about employer learning was obtained by…

The relationship between employer learning and statistical discrimination was explored through a statistical analysis that included a test for statistical discrimination or "rational" stereotyping in environments where agents learn over time. The test is used to study the working hypothesis that, because firms have only limited…

Examines whether employers can infer information about workers' precollege abilities from acquired college credentials and value attainment of credentials because they signal these abilities. Analysis of 1993 National Longitudinal Study of Youth data reveals that employers value attainment of a bachelor's degree for these reasons. Academic degrees…