Sheepskin Effects Research Articles

Research on the Sheepskin Effect in China: Factors Influencing Educational Returns and Heterogeneity Analysis

Using sample data from the China General Social Survey (CGSS2021), this study employs econometric methods based on the basic cost-benefit economics perspective. It investigates the relationship between educational investment and labor income in China in recent years, utilizing the Mincer earnings model as well as an extended model incorporating additional control variables. An Ologit model is constructed to analyze the impact of gender, ethnicity, family economic status, and regional registration on educational attainment among the sample population. Furthermore, the study compares educational returns across different genders, regions, workplaces, and job positions. Finally, based on empirical analysis, suggestions are proposed to enhance individual income levels and optimize the allocation of social educational resources from both individual and environmental perspectives.

Twice as Hard to Get Half as Far? Differences in Sheepskin Effects Between Afro-Colombian and Non-Afro-Colombian Women

ABSTRACT This article explores Belman and Heywood’s sheepskin effect hypothesis using a modified Mincerian wage equation to test the sheepskin effect of returns on education in Colombia. This analysis is based on the 2014 Living Standards Survey from the National Department of Statistics. It includes variables that capture the possession of different levels of qualifications. A test for whether Afro-Colombian women obtain larger returns for signals of high productivity (e.g., a university degree) and lower returns for signals of low productivity (e.g., a secondary school diploma), compared to the non-Afro-Colombian women in the sample, found differential sheepskin effects. Afro-Colombian women in this sample received lower returns for low productivity signals (high school diplomas) than their counterparts do. In contrast, returns on higher levels of education (graduate studies) are higher for Afro-Colombian women than for the other analyzed group. Hence, the results suggest that Afro-Colombian women, as the saying goes, need to work twice as hard to get half as far. They need to rush to achieve higher levels of education, amidst severe hardship, to overcome the existing differences in the returns on education.

Returns to Investment in University Education - Economics Career at Continental University

The present work analyzes the returns to the years of superior schooling of graduates of Economics Career at Continental University within the labor market of the region Junín of the period 2019. For this purpose, the returns to education are investigated under the normal assumptions of Mincer's equation, and later the incorporation of the instrumental variable: school of origin is proposed, in order to correct the problem of endogeneity. Finally, to correct the problem of selection bias, Heckman's technique is used: two-stage regression. This consists of first analyzing the probability of accessing the labor market in the Junín region in terms of variables such as: geographic location, school of origin, age, direct costs. Subsequently, analyzing the return to years of schooling. Likewise, it is important to specify that in the modeling of the probability a second regression is estimated incorporating the variable Academic Grade in order to be able to study the Sheepskin Effect. The results obtained showed that the return to years of schooling is 0.8%, which is not significant and is not corrected for Heckman's selection bias. We also have that the R2 is 10.11% which is very low for this type of cross-sectional data. This result is explained by the degree of rootedness of the graduates in staying in the Huancayo province and the low migration to other labor markets. In addition, this means that they do not have better working conditions that can be transformed into higher income.

Interpreting the Sustainable Development of Human Capital and the Sheepskin Effects in Returns to Higher Education: Empirical Evidence from Pakistan

According to poststructuralists, workers with higher level of education and possession of potential experience are supposed to have higher wages. Yet, there are plausible questions that arise as to what levels of education or work history are needed for the enhancement of wage discrimination. Additionally, the outcomes arising from rehashing years of schooling are worth considering. We used a several methods, employing the administrative Household Integrated Economic Survey (HIES) data from Pakistan without ignoring environmental effects. Our estimated results support the conventional assumptions of linearity of log-wage. First, we found substantial returns for postgraduate diploma holders in both public and private sectors, even after controlling the individual’s heterogeneity. Second, we did notice a significant divergence in return to low-level education (LLE) and job history. Third, rehashing years of education may create suspiciousness regarding the lack of competence. Our results suggest that continuous investment in human capital toward postgraduate diploma may result in higher premiums.

Assessment of Sustainable Development of the Performance of Higher Education Credentials in the Transitive Labor Market

Given the transitive challenges in the labor market, education can provide a sustainable developmental map for worldwide economic prosperity. Deep understanding of the dynamics of human capital, reflecting earnings aspirations in the labor market, indicates the need for policy makers to monitor and modify pedagogical curricula to meet the supply/demand of markets based on scientific evidence. In this study, we propose a methodology based on a household integrated economic survey (HIES) and, using different models, assess the impact of attained education and returns on the practical utility of skills within the context of a transitive labor market. We observe that effort levels are snowballing and rejection rates are declining for people with higher education (HE), whereas wage offers decline for people with low education (LE). Our results reveal significant differences in the supply/demand factors of both the public and private markets’ one-shot and continual affiliations. We conclude the impact of sheepskin effects and the implication of our findings.

Substitution or complementation: the influence of parents’ educational level on sheepskin effects in the individual returns to education in China

Numerous researches have already revealed the existence of sheepskin effects and proved the signaling value of education based on empirical materials from developing or developed countries; however, only a few empirical studies have explored the mechanism lying behind the proved educational signaling value. With this regard, based on recent 6-year cross-section data from China General Social Survey, the authors discussed the interactive effects between the educational signaling value and parents’ educational level. After correcting the selective bias and endogenous issues by multiple methods—Heckman two-stage, IV, and comprehensive models combined HTS and IV—it finds that there exist obvious sheepskin effects in the returns to education in China and robust complementary effects between parents’ educational level and the signaling function of individual’s education on their personal income.

A New Strategy to Identify Causal Relationships: Estimating a Binding Average Treatment Effect

This paper proposes a new strategy to identify causal effects. Instead of finding a conventional instrumental variable correlated with the treatment but not with the confounding effects, we propose an approach which employs an instrument correlated with the confounders, but which itself is not causally related to the direct effect of the treatment. Utilizing such an instrument enables one to estimate the confounding endogeneity bias. This bias can then be utilized in subsequent regressions first to obtain a binding causal effect for observations unaffected by institutional barriers that eliminate a treatment's effectiveness, and second to obtain a population-wide treatment effect for all observations independent of institutional restrictions. Both are computed whether the treatment effects are homogeneous or heterogeneous. To illustrate the technique, we apply the approach to estimate sheepskin effects. We find the bias to be approximately equal to the OLS coefficient, meaning that the sheepskin effect is near zero. This result is consistent with Flores-Lagunes and Light (2010) and Clark and Martorell (2014). Our technique expands the econometrician's toolkit by introducing an alternative method that can be used to estimate causality. Further, one potentially can use both the conventional instrumental variable approach in tandem with our alternative approach to test the equality of the two estimators for a conventionally exactly identified causal model, should one claim to already have a valid conventional instrument.

Diploma as signal? Estimating sheepskin effects in the Philippines

The screening theory of education argues that education does not necessarily enhance worker’s productivity, but serves only as a signal of worker’s pre-existing ability. Empirical studies found that the mere possession of a diploma increases wages disproportionately than without it, or the so-called sheepskin effects. Using a sample of urban non-agricultural wage workers in the Philippines, this paper finds substantial sheepskin effects for holding a tertiary diploma, even after controlling for individual heterogeneity. While returns to tertiary education are lower in the competitive (private) sector, there is evidence of diverging age-earnings profiles between tertiary and secondary graduates, indicating a productive value higher education.

SHEEPSKIN EFFECTS IN THE RETURNS TO HIGHER EDUCATION: NEW EVIDENCE FOR MALAYSIA

The aim of this study is to distinguish between the returns to education from mere years of schooling as a reflection of their productive-enhancing contribution (human capital) and the returns to education from certificates of qualification which serve as signals of individual's ability (sheepskin effects). In order to do so, the present study relies on data from Household Income Survey (HIS) 2002–2012. Even though the overall result found the sheepskin effects serve as a higher signal of productivity compared to years of schooling in enabling individuals to seek higher returns in the labour market, the sheepskin effects from both diploma and university degrees are different between two phases: 2002–2007 and 2007–2012. The over-education and under-skilled situation respectively occur among degree and diploma holders in the Malaysian business services sector might be evidence that the sheepskin effects for both credentials are limited to provide higher signal to employers compared to university dropout between 2002 and 2007. However, the patterns of sheepskin effects between 2007 and 2012 are significantly different from 2002 and 2007. The present study discovered that the sheepskin effects brought some substantial earnings than years of schooling with the largest individual's sheepskin effects – associated with the degree and diploma qualifications. Due to the increasingly importance of academic certificate in determining the labour market earning, this study suggests the higher learning institutes to further strengthen their collaboration with employers and representatives of skilled workers from relevant industries in the quality assurance process and accreditation. This is to ensure that the skills needed in the labour market are incorporated in the university curriculum as these are effective in increasing graduate's employability.

On the Size of Sheepskin Effects: A Meta-Analysis

AbstractThe authours use information gathered from 122 studies on the effects of high school diplomas on wages in different countries worldwide to carry out a meta-analysis that shows high school diplomas have a statistically significant effect on wages of nearly 8%. This effect varies whether the country is away from the tropics or whether factors such as gender, race, and continent are taken into account. The results also reveal the existence of a publication bias that tends to increase the magnitude of the sheepskin effect. Nevertheless, when the former is factored into the analysis the latter remains statistically significant.

Does Longer Compulsory Education Equalize Schooling by Gender and Rural/Urban Residence?

This study examines the effects of the extension of compulsory schooling from 5 to 8 years in Turkey in 1997—which involved substantial investment in school infrastructure—on schooling outcomes and, in particular, on the equality of these outcomes between men and women, and urban and rural residents using the Turkish Demographic and Health Surveys. This policy is peculiar because it also changes the sheepskin effects (signaling effects) of schooling, through its redefinition of the schooling tiers. The policy is also interesting due to its large spillover effects on post-compulsory schooling as well as its remarkable overall effect; for instance, we find that the completed years of schooling by age 17 increases by 1.5 years for rural women. The policy equalizes the educational attainment of urban and rural children substantially. The urban-rural gap in the completed years of schooling at age 17 falls by 0.5 years for men and by 0.7 to 0.8 years for women. However, there is no evidence of a narrowing gender gap with the policy. On the contrary, the gender gap in urban areas in post-compulsory schooling widens.

Sheepskin and Working Experience Effects on Wage in Indonesia: The Importance of Signalling

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Private Returns to Education in Urban Cameroon

Earlier studies on the impact of education on earnings highlighted a declining pattern of the private returns in developing countries. However, recent research has argued that failing to account for the segmented structure of the labour market could be misleading. This study aims to estimate private returns to education in Cameroon, focusing on how they vary across the different segments of the Cameroon labour market. The data used in this study are drawn from the 2005 Employment and Informal Sector Survey, which is nationally representative and comprehensive survey providing information over 8,540 households and 38,599 individuals around the country. The estimation of wage equations corrected from selectivity bias reveals that there are convex rates of return to education in all the segments of the labour market. As far as the private sector is concerned, it is found that those who graduated from primary school earn no returns compared to those who never attended school. The fact that only degrees are rewarded on the Cameroon labour market evidences the existence of a sheepskin effect in Cameroon and may serve as a confirmation of the signalling role of education in this context.

Sheepskin effects of education in the 10-year Framingham risk of coronary heart disease

While the association between education and adult health is well documented, it is unclear whether quantity (i.e. years of schooling) or credentials (i.e. degrees) drive this association. Individuals with degrees may have better health than their non-credentialed counterparts given similar years of schooling, the so-called “sheepskin” effect. This paper contributes to this line of inquiry by examining associations of educational degree and years of schooling with the Framingham Risk Score, a measure of 10-year risk of coronary heart disease (CHD), using data from a unique birth cohort (the New England Family Study; participants mean age 42 years) with prospective information on childhood health and intelligence quotient (IQ). According to our results, years of schooling were inversely associated with 10-year CHD risk in the unadjusted model but not in the fully adjusted models that included degree attainment. By contrast, associations between degree attainment and 10-year CHD risk remained significant in the fully adjusted models that included years of schooling. College degree holders had 10-year CHD risk 19% (95% CI: −33%, −2%) lower than individuals with HS degrees or less in the fully adjusted models. Subanalyses evaluating sheepskin effects on the individual components of the 10-year CHD risk algorithm showed the expected education gradient was generally noted for each of the individual components, with decreasing prevalence of “high risk” values associated with higher degree credentials. Our results suggest educational credentials provide an additional benefit to risk of coronary heart disease beyond schooling.

Stay in school or start working? — The human capital investment decision under uncertainty and irreversibility

At any moment a student may decide to leave school and enter the labor market, or to stay in the education system. The timing of their departure determines their level of academic achievement and formal qualification. Education is a multi-stage process of investing in an accumulative human capital stock. How long can I expect to go to school? How much will I invest in my education? To answer these questions we apply the real option approach. We depart from recent literature by (1) adding accumulated education costs and determining the expected time of market entry, (2) considering complete earnings profiles including entry-level wages, sheepskin effects and earning dynamics, and (3) discussing the option value of schooling while introducing potential career opportunities or threats of unemployment modeled as major uncertain events connected with particular formal education achievements.

Long Run Returns to Education: Does Schooling Lead to an Extended Old Age?

While there is no doubt that health is strongly correlated with education, whether schooling exerts a causal impact on health is not firmly established. We exploit a Dutch compulsory schooling law to estimate the causal effect of education on mortality. The reform provides a powerful instrument, significantly raising years of schooling, which, in turn, has a significant and robust negative effect on mortality. For men surviving to age 81, an extra year of schooling is estimated to reduce the probability of dying before the age of 89 by almost 3 percentage points relative to a baseline of 50 percent.

Sheepskin Effects in the Returns to Education: Accounting for Enrolment and Completion Effects

This paper contributes to the literature by separately analysing the signalling (or sheepskin) effects of the enrolment in and the completion of vocational education and training [VET] as well as higher education [HE]. Moreover, we investigate the persistence of these sheepskin effects over time. We take advantage of the Longitudinal Surveys of Australian Youth [LSAY], which contain comprehensive information about completed and uncompleted courses and subsequent labour market outcomes. We find that signalling effects form a substantial part of the total return to education but that they vary by type of course. In addition, we show that both course attendance and course completion contribute to the overall signalling effects.

The Association Between Blood Pressure and Years of Schooling Versus Educational Credentials: Test of the Sheepskin Effect

Attaining a degree may offer greater opportunities for health than years of schooling alone. This study examines whether there is a degree, or "sheepskin," effect on the association between education and blood pressure. Multivariable-adjusted ordinal and linear regression models assessed associations of years of schooling and degree attainment with systolic and diastolic blood pressure in a sample of 552 adults ages 38 to 47 years. Years of schooling was inversely associated with systolic blood pressure adjusting for age, gender and race (β = -0.4, 95% confidence limit: -0.7, -0.1 mmHg systolic blood pressure/year of schooling). Additional adjustment for mother's education, childhood verbal intelligence quotient, childhood health, and childhood socioeconomic status had minimal impact on effect size (β = -0.3, 95% confidence limit = -0.7, 0.0). However, years of schooling was no longer associated with blood pressure in the fully adjusted model which included additional adjustment for degree attained (β = 0.0, 95% confidence limit: -0.5, 0.4). In the fully adjusted model (including adjustment for years of schooling), individuals with a graduate degree still had significantly lower systolic blood pressure than HS degree-holders (e.g., β = -9.2, 95% confidence limit: -15.2, -3.2 for graduate vs high school degree). Findings were similar for diastolic blood pressure. The association of years of schooling with blood pressure may be largely due to degree attainment rather than simply the knowledge and skills accumulated due to years of schooling alone.

African Leaders: Their Education Abroad and FDI Flows

Leaders are critical to a country's success. They can influence domestic policy via specific measures that they enforce, and they can also influence international public opinion towards their country. Foreign Direct Investments are also essential for a country's economic growth. Our hypothesis is that foreign-educated leaders attract more FDI to their country. Our rationale is that education obtained abroad encompasses a whole slew of factors that can make a difference in FDI flows when this foreign-educated individual becomes a leader. We test this hypothesis empirically with a unique dataset that we constructed from several sources, including the Library of Congress and the World Bank. Our analysis of 40 African countries employs the robust technique of conditional quantile regression. Our results reveal that foreign education is a significant determinant of FDI inflows, beyond other standard characteristics. While intuitive, this result does not necessarily indicate sheepskin effects or superior human capital obtained abroad. Rather, it indicates the powerful role of the social capital, networks, and connections that these leaders built while they were abroad that they in turn mobilize and utilize when they become leaders.

Education and Earnings in the Tourism Industry – the Role of Sheepskin Effects

This study is the first to report on sheepskin effects in the tourism industry; that is, on the earnings returns to educational degrees net of the returns to accumulated years of schooling. The results show statistically and economically significant sheepskin effects, with the returns to educational degrees clearly exceeding the returns to years of schooling for both male and female employees. Both human capital and sorting explanations of this observation are discussed.