Are School-Provided Skills Useful at Work? Results of the Wiles Test

Abstract

We test for the signaling hypothesis versus the human capital theory using the Wiles test in a country which has experienced a dramatic increase in the supply of skills in a relatively short period of time. For this purpose, we construct a job match index based on the usefulness of school-provided skills and the relevance of the job performed to the field of study. Then, we regress the first earnings of graduates on this index using OLS. The data we use come from a representative tracer survey of Poles who left secondary schools or graduated from higher education institutions over the period of 1998–2005. We find that only the graduates from higher education institutions obtain a wage premium from skills acquired in the course of formal education. This finding is robust to a number of robustness checks with different indicators of educational mismatch and instrumental variables.