Education and Signaling: Evidence from a Highly Competitive Labor Market

@inproceedings{Heywood2004EducationAS,
  title={Education and Signaling: Evidence from a Highly Competitive Labor Market},
  author={John S. Heywood and Xiangdong Wei},
  year={2004}
}
This paper directly tests for differences in returns to education between the employed and self-employed in Hong Kong. Using a step-function, we find significantly smaller returns for the self-employed, suggesting that in the highly competitive labor market of Hong Kong education plays a signaling role. This pattern persists for both genders, when accounting for self-selection into employment status and when accounting for self-employed professionals who signal.